It is a pleasure to be here this afternoon to close the days proceedings.
The topics you have covered today traversed a wide range of areas all of which are pertinent to the current challenges facing the Government and the country.
Looking at the emerging opportunities and challenges for business.
Looking at the business opportunities in China at the beginning of the Asian century.
Looking at better ways of managing the interplay between risk and innovation in the public sector.
And looking at leadership in challenging circumstances.
All of these topics are front of mind for me as Finance Minister.
Today I want to focus my remarks on the broader economic challenges that face Australia and how solutions to those challenges need to be formed in sensible and rational debate.
When politicians debate the policies that will shape the nations future, Australians are entitled to expect arguments occur on a sound factual basis.
Put simply, the facts matter.
Getting the numbers right matters.
Leadership and Change
If handled well, the complexities and challenges facing the nation can always be turned to opportunity and advantage.
This will undoubtedly require leadership.
I know that Peter Cosgrove addressed you earlier today, and touched on the importance of leadership in crisis.
On the importance of not just surviving a crisis, but leading through one.
This resonates with the Governments response to the global financial crisis in late 2008.
With markets and economies around the world on a precipice, the Australian Government implemented a number of decisive measures to support jobs and protect the economy from the worst of the downturn.
That we were virtually the only advanced economy to avoid recession stands testament to the success of the stimulus program.
And that our public finances remain so strong in the face of a $130 billion revenue write-down is a testament to the discipline of our fiscal strategy.
The proactive response exhibited the type of leadership that is required to not just muddle through, but to respond on our own terms.
Passivity in the face of such a crisis would have seen the Government beholden to the international forces that were wreaking havoc on other economies.
But swift action meant that jobs were supported.
Swift action laid the foundations for growth so that the economy would prosper as the world economy recovered.
These lessons from the global financial crisis have a lasting utility for politicians and policy makers.
We never get to implement policies in a vacuum.
Whether in business or government, change is always with us.
The operating environment is never static.
If we accept this premise that of dynamic and changing circumstances then the lessons of the past provide useful insights for the future.
Indeed, Australia has succeeded when we have recognised change and turned it to our advantage.
We have done less well when we have sought to ignore change.
When we have sought to avoid the inevitable.
Protectionist policies of the past are a case in point.
Attempts to block or slow the flows of goods and services lead to higher costs for Australian consumers.
In contrast, the economic reforms of the Hawke and Keating Governments floating the dollar, de-regulating markets and tariff reform turned Australia into a modern and open economy.
We have come to understand that our economic security is best served by embracing global markets through enabling Australia to compete. By ensuring that our workforce is equipped for tomorrows jobs.
Such reforms are rarely easy, and usually opposed.
The current opposition to the clean energy future package and the mineral resource rent tax are contemporary examples.
But leadership requires staring down these myopic views and looking to future generations.
Because the well-being and prosperity of the next generation matters more than todays scare campaign.
Lessons from the GFC in a time of uncertainty
The current climate the current uncertainty in the global economy heightens the importance of this approach to policy.
And our recent past is instructive in how to handle this uncertainty and position Australia for growth.
It is by looking through the immediate circumstances to the longer term solutions that Australia has been best served in the past.
The temporary nature of the governments stimulus program, for instance, is now only being fully recognised.
In the aftermath of the GFC, as the worlds advanced economies are embarking on painful transitions, the strength of the Governments fiscal strategy is becoming clearer.
The fiscal strategy we put in place demanded that stimulus was temporary and targeted, and that once the economy began to recover there was a swift consolidation of government sector activity.
If you go back to the Updated Economic and Fiscal Outlook released in early 2009, you can see the fiscal strategy was in place from the beginning.
And we have stuck to it.
We have matched clarity of purpose, with our strength of actions.
Adherence to the fiscal strategy is delivering the fastest fiscal consolidation in over half a century as the stimulus spending tapered off.
Real growth in payments is limited to two per cent on average until the budget is back to surpluses of one per cent of GDP.
The Government has delivered over 100 billion in savings in the past four budgets.
Internationally, markets are looking for governments to demonstrate similar credibility.
Comments by the IMF head Christine Lagarde have reinforced the importance of balancing fiscal consolidation without detracting from growth.
These were repeated in the IMF World Economic Outlook released this week.
The report highlighted credible medium term fiscal consolidation as one of the three priority policy responses needed around the world.
Such strategies will undergo scrutiny.
And the judgement of the markets can be swift.
The European experience reminds us that an absence of certainty around fiscal strategies can impact market confidence.
The political deadlock in America similarly shows how markets react when politicians are unable to set aside the short term politics to achieve long term solutions.
The likelihood of ongoing volatility something that the Treasury Secretary last month noted in his Shann Memorial Lecture will see even greater weight placed on the fiscal policy settings of nations.
Scrutiny will be high, leadership will be required.
Governments need to face the fiscal facts head on.
Because without an honest evaluation of the problems, articulating responses will be difficult.
Just as we know that the next generations prosperity relies on todays reforms, we know that reforms need to be grounded with clear objectives, and certainty of the facts.
The importance of getting the numbers right
The importance of getting the numbers right is paramount.
Given the current uncertainty in the global economy, the credibility of fiscal policies is even more critical.
In the face of future challenges now is not the time for wilful ignorance of past lessons.
Policy debates whether they be fiscal, social or climate policy need to be anchored in fact.
But the facts are an alien concept in too many of our current national debates.
We have seen a debasing of the public finance debate in Australia over the past 12 months.
Against the backdrop of global uncertainty, this has broader ramifications for local markets and business confidence.
When you have the shadow Treasurer calling for larger surpluses while opposing savings measures and supporting more spending you know something isnt adding up.
When Opposition members publicly attack public institutions, including the Treasury you know the debate has been diminished.
When the Opposition calls for fiscal transparency then refuses to expose its own policies to costing scrutiny you know that accountability is lost.
This week we have witnessed the height of this negativity in the Parliament as members of the Opposition have waged war on the same career public servants and economic institutions that would serve them if in government.
And for what purpose?
All to hide the fact that their policy costings from the last election were specious that they got their numbers wrong.
Political parties are always judged on our management of the economy.
We are always judged on our management of the Budget.
And so we should be.
Governments and alternate governments need to set out clear and unambiguous plans for the economy.
To secure jobs.
To encourage growth.
And to put government spending on a long term footing.
In this, the numbers matter.
Such judgements are passed by the Australian people.
But judgement is also passed by the markets.
What we have seen in Europe shows that markets will punish those countries without strong fiscal frameworks in place.
Only a few hours ago we saw S&P confirm Australias AAA rating on the back of our strong fiscal performance.
The nation, and the markets, are entitled to pass judgement on the alternative government.
Those who loudly demand an election cannot hide permanently behind vitriol and aggression to avoid scrutiny.
The public should expect that political parties of all sides are transparent and open about the costs of their plans.
This is particularly important in election campaigns.
The key objective of the Charter of Budget Honesty Act fiscal transparency remains central to any debate on government finances.
In the past year, with the support of the independent members of the Parliament, the government has been working to reform this area of policy.
With the current state of global uncertainty, strengthening the transparency and accountability of public finances is of heightened importance.
Parliamentary Budget Office
One reform that is crucial to this endeavour is the introduction last month of the Parliamentary Budget Office legislation into the Parliament.
This legislation has been the subject of considerable debate this week.
Some of it was personal, much of it was heated and targeted at distinguished career public servants.
But the establishment of an independent Parliamentary Budget Office represents a significant and permanent reform that will build on Australias already strong fiscal frameworks.
The PBO model is based on the unanimous recommendations of the parliamentary Joint Select Committee.
The Committee had broad parliamentary representation it included members of the Liberal Party, the National Party, the Labor Party, the Australian Greens and an independent member of parliament.
The Committees report merits reading.
The Committee grappled with a number of issues in getting the balance right.
Indeed a number of the issues that have been raised in Parliament this week were considered by the Committee with the bills before the Parliament reflecting their unanimous view.
For all the reasons Ive outlined today, it is hard to imagine an issue where bipartisan support is more warranted.
The PBO will ensure greater accountability and transparency in policy making It will promote a greater understanding of fiscal policy in the community.
There are two key areas of reform that will lift the public finance debate in Australia. The most obvious shift will be non-government parties having access to costings advice.
Resources similar to that of government will now, for the first time, be made available to the opposition and minor parties.
Never before have such resources been dedicated to the development and costing of policies outside the executive.
This resource provides confidential costings to non-government parties except in the caretaker period where costings consistent with the current practice are made public as they are finalised.
This resource goes to the heart of ensuring policy debates are grounded in fact.
Future elections will not have to be mired in costing debates.
The PBO will level the playing field.
And we will know the public, the markets and business community will know that when a political party opts out when they seek out a friendly firm to cost their policies they are avoiding scrutiny.
Unfortunately it looks as though this may be the case.
This week the Shadow Treasurer declared the Opposition would not submit its policies for costing by either the PBO or the Treasury and Finance Departments during the next election.
Disappointingly, yesterday it was reported that while the Opposition would use a private firm during the campaign thereby avoiding scrutiny they may use the PBO for policy costings prior to the issue of the writs.
This undermines one of the key purposes of the PBO.
A key nexus at the core of the PBO is that access to costings and policy development resources comes with accountability.
The Opposition intend to break this nexus.
This will undercut another key purpose of the PBO: improving the community understanding of fiscal policy.
Without all parties operating on the same basis, an outcome similar to the last election will occur.
We need to have agreed terms of debate.
And this need for informed debate is matched by the need for improved understanding. One thing I think that you all would agree with me on is the need for increased financial literacy across the community.
Whether it is the family budget and managing credit cards and mortgage repayments or the Commonwealth Budget, raising the base level of understanding in the community is important.
The PBO remit is directly aimed at raising the level of comprehension so that these issues are not shrouded in ambiguity.
So that elections can be fought on the facts, not disagreeing with the rules.
Concluding remarks
Global financial uncertainty reinforces the need for stability at home.
Central to achieving this is clarity and certainty of fiscal purpose.
Such clarity and certainty demand numbers which are grounded in fact, not fiction.
As we focus on the big challenges before us, we need to have an informed debate.
Anything less is a disservice to the community we serve.
 
ENDS