Dennis Shanahan, in New York | September 28, 2009
UNIVERSAL endorsement from US President Barack Obama, other G20 leaders and international bankers for economic stimulus as a means of protecting jobs has bolstered the Rudd government's 2008 argument for its massive building project.
As Kevin Rudd declared the global economy was "still in the woods", Wayne Swan said much of the world growth was because of government spending and it was too early to withdraw stimulus for government building programs.
The Prime Minister and Treasurer leapt on positive support from the other G20 leaders and central bankers for continued government spending, and will use Australia's founding membership of the world's new premier economic forum to pursue the Coalition through to the next election.
A leaders' directive to G20 finance ministers to look at options to finance developing countries to cut greenhouse gas emissions before the UN Copenhagen climate change conference in December has also given the government's determination to pass its carbon pollution reduction scheme an international boost.
"The G20 meeting lays bare the Coalition's economic credibilty," Mr Swan said yesterday in New York after attending meetings in Washington and the G20 leaders' summit in Pittsburgh.
"It leaves them up the end of a very dry gully. So much of current global growth now is a product government sitmulus. We have to work on the basis that we are facing an outlook that is slower than we have been used to. There wasn't a leader or a finance minister (at the G20 meetings) who wasn't in favour of maintaining stimulus spending."
Malcolm Turnbull and his Treasury spokesman, Joe Hockey, have argued that, given Australia's strengthening economy, the government's $42 billion economic stimulus package should be scaled down to reduce Australia's long-term debt.
Mr Swan, in an interview with The Australian in New York yesterday, said "not one" world leader at the Pittsburgh G20 meeting or central banker said there should be an immediate withdrawal of government cash into building projects.
"There wasn't a leader in the room who didn't support the G20 process, there wasn't a leader in the room who thought it was a left-wing cabal, there wasn't a leader in the room who supported the immediate withdrawal of stimulus, and there wasn't a leader in the room who thought we shouldn't do anything about executive pay," the Treasurer said yesterday.
"To assume suddenly, just because the sitmulus has been successful, it should be withdrawn is to miss the underlying fragility of our global outlook."
At the end of the summit, Barack Obama, as host of more than 20 world leaders and global financial agencies, said: "We will continue our stimulus efforts."
Speaking in Pittsburgh, once a rustbelt city with high unemployment because of the closure of old steel mills, the US President said the world had to bring itself back from the brink and ensure long-term prosperity by breaking the boom-bust cycle.
Mr Obama said tough new financial regulations the G20 was now looking at would help prevent bank failures and market abuses, and would ensure executive salaries were set in the long-term interest, not in terms of short-term greed.
In Pittsburgh, Mr Rudd said the institutionalisation of the G20 as the new world economic grouping, eclipsing the role of the world's eight richest nations, the G8, marked a "historic day".
Mr Rudd said the Pittsburgh summit was "focused on building our collective response to the global recession".
"Our goal, as these major economies, is to deliver sustainable long-term growth now and into the future, not to return simply to the fundamental instability of the boom and bust cycles of the global economy in the past," he said.
"The framework outlines the need for: first, continued implementation of the stimulus measures of the type which we in Australia have implemented, and which have been embraced nationally and internationally; second, planning for globally co-ordinated withdrawal from extraordinary fiscal and monetary measures taken in response to the crisis, but only when the recovery is secure; and thirdly, embarking on a new era of global co-operation to rebalance growth, moving away from excessive reliance on debt-driven consumption, avoiding destabilising booms and busts, and boosting productivity to secure higher, more stable growth in the future.
"On climate change, leaders agreed we had to push for a positive outcome at Copenhagen. We also agreed the G20 finance ministers would be commissioned between now and Copenhagen to provide for leaders climate change financing options for subsequent consideration in the lead-up to Copenhagen."