Chairman, ladies and gentlemen.

Good afternoon it is a great pleasure to be here in Australia’s Centenary year.

I have been a regular visitor to Australia over the years.

It is extraordinary to think that a journey which used to take weeks can now be covered in twenty four hours. That is one of the many ways in which our world has changed over the years.

As we move to a global village and greater independence many national policies are now influenced by global agreements and global consensus.

But there are some constants. Australia and the UK have a long and close relationship. The links between our two countries remain as strong now as they have ever been.

Over one million Britons of the present generation have made Australia their home.

1.6 million Australians have a parent born in the UK.

And the flow of visitors between our two countries brings many of us into close contact with each other.

The value of these ties is difficult to quantify. But it is deep in our culture and history and I believe that is hugely important to our trade and investment relations.

The bilateral trade and investment relationship is impressive by any standards. UK visible exports to Australia were up by 24% in the year 2000. And we remain the second largest source of foreign investment in Australia.

But it is by no means a one way street. We are the largest export market for Australia in the European Union.

And your inward investment into the UK is even more impressive. 70% of all Australian investment in the EU comes to the UK where we have as many as 700 Australian firms.

They come to us because they recognise that the UK offers the best environment for business. We are determined to keep it that way.

British Trade International - our department responsible for trade and investment development – plays a key role and has designated Australia a Target Market.

Our aim is to increase trade and investment between our two countries focussing in particular on the IT sector and small and medium sized enterprises.

Increasing trade is one aspect of what we are coming to call "globalisation".

The word is used in different ways. For some it is a force for evil which should be resisted.

In fact though, it means the growing interdependence and inter-connectedness of the modern world. That makes sense because it is right, but also because it is good for business.

So I want to say something about globalisation, not just in trade, but in the environment and other issues.

As anyone who knows me will recognise, I am a political animal. I think the leader of the Liberals in Britain called me "tribal".

It is from that political perspective – the perspective of a political negotiator – that I want to reflect on some of the changes we are seeing in the world today, where global solutions are required and where the pace of change has quickened.

Think for a moment about the history of international environmental discussions. We have come a long way in a relatively short time. And the pace of change is increasing.

As you may know, the first international Earth Summit was held in Stockholm in 1972. It agreed that we had to liberate ourselves from "the destructive forces of mass poverty, racial prejudice and economic injustice".

But:

• it took 15 years to get from Stockholm to the Montreal Protocol on the protection of the ozone layer; and

• it took two whole decades to get from Stockholm to the Rio Earth Summit in 1992.

It is only in the last decade since Rio that the pace of change has rapidly increased.

There is no doubt that climate change is the most serious environmental threat to mankind today.

It is clear to all of us that the speed of climate change is increasing as the climate lurches from one extreme event to another in different parts of the world. Only last year, in Britain we suffered the worst floods and storms we had seen since the 17^th century. It was what I have described as a "wake-up call".

People the world over are experiencing floods, storms, droughts and desertification like they have never seen before.

Here in Australia you have seen:

• the second highest rainfall since 1900 with numerous floods;

• mass bleaching of the coral reefs on your north and north west coasts;

• the warmest decade since records began; and

• in 1998 the warmest year on record.

You have also seen worrying damage to the Antarctic ice caps.

Where ever I go there is a growing recognition that climate change is taking place – an uneasiness that something is not right and out of natural balance. That is shared by world leaders as well as millions of ordinary people. And it is true in the developing world, just as much as in the developed world.

My experience of China and India – two G77 countries in which I take a particular interest – is that they are making significant efforts to improve the environment. Smog, air and river pollution are a matter of growing public concern.

My discussions with Premier Zhu Rongji and Prime Minister Vajpayee show that the importance of the environment is recognised at the highest levels and acted upon even though they have no legally binding Kyoto targets.

I know that here in Australia you are very worried about the competitive disadvantage that you may suffer if you take action on climate change.

But think for a moment. Between 1996 and 1999 Chinese carbon dioxide emissions fell by 6.5% despite 25% economic growth. Comparable figures for the US show a rise in carbon dioxide emissions of 5% with only 13% economic growth.

In China they have halved carbon dioxide emissions per GDP and emissions per capita are still only 20% of developed countries.

They have also closed down thousands of factories for pollution offences.

It’s worth bearing these facts in mind next time you hear someone moaning that developing countries don’t care about the environment.

And don’t forget it was developed countries that caused the damage in the first place.

The 1992 Rio Summit recognised the problem of climate change and called for united voluntary efforts to reduce greenhouse gases.

Some countries met their voluntary targets – and I am proud of what the UK has achieved.

Europe has a target of minus 8% overall. But under the "European Bubble" targets range from minus 28% for Luxembourg and minus 21% for Germany to plus 27% for Portugal. The United Kingdom’s target is minus 12.5%.

Australia negotiated a target of plus 8%, reflecting your circumstances and industrial structure. In addition you negotiated a number of concessions, including allowances for land clearing and for carbon sinks like forests.

As John Hewson, John Howard’s predecessor as Leader of the Liberal Party, said in Friday’s Australian Financial Review, that was a pretty good deal for Australia, particularly since in per capita terms you are the world’s biggest greenhouse gas emitter.

Having said that, I want to pay tribute to your ex-Environment Minister – now your Defence Minister – Robert Hill. Not only did he negotiate a good deal for Australia. He also made a significant contribution to the broader international climate change process. He has remained committed to consensus throughout and has helped to forge international agreement.

We must not underestimate that achievement. Maintaining the global consensus is a recognition by the global community of the threat posed by climate change.

And it has been secured among more than 180 countries with only one casualty – the United States. It is now important that we all ratify Kyoto and bring it into force next year.

I do not underestimate the importance of America’s refusal to accept Kyoto.

But I believe it is not the end of the line. We must act together to bring the US back on board and not use the US position as an excuse to do nothing.

I know that there is particular concern in Australia about the US position. But don’t forget it was the first President Bush who signed the Rio Convention in 1992 and the United States did not seek to block agreement at The Hague, Bonn or Marrakesh – although I think they were taken aback and did not expect the international community to press ahead towards ratification without the US.

As I know from my visit to Washington last week, the US is still reviewing its position on climate change. It accepted very tough targets at Kyoto – the headline 7% reduction in emissions was in reality a reduction by 30% against projections.

That though was under the previous Administration – a fact of political reality which should be recognised when we look forward to future participation in the process by the Americans.

The new Administration’s assessment was that it couldn’t meet the targets set by President Clinton and Vice President Gore without considerable damage to its economy. They also felt that all developed and developing countries should be involved.

It is a fact that President Bush made a political decision on Kyoto.

We can’t turn the clock back on that, but now the review is underway and I made clear last week in Washington that when it is finished we are willing to enter in to a debate.

I am in any case sure the review will come up with concrete proposals to reduce domestic greenhouse gas emissions – some of which are already underway.

And I am hopeful that we can deal with some of the US objections – just as I am hopeful that in the medium term some of the richer developing countries will adopt targets to reduce greenhouse gas emissions. Don’t forget, the GDP of the Philippines is higher than that of Portugal.

To use an analogy, the Kyoto train has left the station. There are plenty of stops where other passengers can get on board. I include the US and the richer developing countries among those passengers.

One opportunity is the World Summit on Sustainable Development in Johannesburg.

But we also have a timetable built in to the Kyoto Protocol to review commitments in 2005 and 2010. There are plenty of opportunities for progress to be made.

I also want to say a word about business and the increasing support they have given since Kyoto.

At Kyoto the Global Climate Coalition of oil producing companies and large scale industries was hostile to any agreement. They even rejected the science and its predictions.

Industry in Australia was also concerned. But over the last few years around the world business has increasingly come on board and worked constructively to build agreement.

Without the engagement and support of business we cannot win the battle against climate change. That is something which the US realised before any of us and which we have found in developing our British climate change programme. Industry is motivated as much by the commercial opportunities offered by Kyoto as by its environmental contribution.

Business has begun to see that our Kyoto targets can be achieved by ‘gain not pain’ by improving the environment at the same time as developing commercial opportunities.

There are a range of incentives:

• emissions trading which allows countries and companies to sell their surplus reductions;

• sinks which give credit for absorbing greenhouse gasses in forests;

• the Clean Development Mechanism which allowed developed countries and their industries to invest in climate friendly projects in developing countries, for the benefit of both; and

• Joint Implementation, which allows industry to get credit for climate friendly investment in other developed countries.

These mechanisms give us flexibility. They are global solutions – giving benefits to business, the global economy and greenhouse gas emission reductions.

Having said something about business I must of course also acknowledge the hugely important but very different role played by NGOs.

The environmental NGOs have raised the profile of climate change with the public and made tackling climate change a political issue as well as common sense.

I particularly recall the role they played at Kyoto where they helped clinch the historic deal by keeping the pressure on the politicians up until the last moment but then recognising that the protocol was an excellent deal for the environment.

Climate change is a good example of the global community working together to solve global problems.

Global co-operation is even more important after the terrible events of 11 September.

The world has successfully responded in a coalition against terrorism – and I know that Australia has acted quickly to support the coalition.

But I believe the new spirit of global co-operation can be used for good, as well as to fight evil.

It is the poor places, the places without food, fresh water and electricity that are the breeding grounds for terrorism. Tackle these issues and you are tackling some of the causes of terrorism.

It is with that in mind that I believe the World Summit on Sustainable Development in Johannesburg next September has a major part to play. It is a great opportunity to create a global alliance for greater prosperity and social justice.

We need to win the peace as well as the war.

We need to see Johannesburg in the context of other major international initiatives. I am thinking in particular in terms of a route map from the recent and successful Doha World Trade talks, through to the Finance for Development Conference in Monterrey in Mexico and then on to Johannesburg.

These three conferences are dealing with highly interrelated subjects.

Doha has put development on the trade agenda. Monterrey will put development on the finance agenda. Johannesburg will bring these together and ensure that development is sustainable and benefits all, in particular the world’s poor.

Our starting point is that one in five of the world’s population – two thirds of them women – live in abject poverty. It is unacceptable that more than one billion people around the world live on less than one dollar a day.

You will know that all major countries and international organisations have signed up to meet the millennium development goals so that by 2015 we hope that:

• poverty will be cut by half;
• every child will get a primary education; and
• child mortality will be reduced by two thirds.

You may also have heard our Chancellor Gordon Brown making proposals to the IMF two weeks ago for a new global deal with opportunities and obligations for both developed and developing countries.

It goes without saying that an enormously important part of that is to improve the climate for international trade. It is a sign of the spirit of co-operation after 11 September that the success in Marrakesh was followed by the successful ministerial conference of the WTO in Doha.

Doha was a clear demonstration that the global community was determined to strengthen security by sharing prosperity.

The Doha agreement combines the launch of a broad new round of trade negotiations with a package of measures specifically focused on the needs of developing countries.

The new round launched at Doha opens the prospect of increased trade in agriculture, other goods and services. That is the most certain path to economic progress for developing countries.

If we could just halve the trade protection in both developed and developing countries, the wealth of developing countries would be boosted by around $150 billion a year. That could lift as many as 300 million people out of poverty.

Business in the developed world should not see this as a threat. Doha will help provide the stable and predictable climate which business needs to flourish and make it easier to attract foreign investment in both developed and developing countries.

That, I believe, is a real step forward. But we now have to translate it into results for people all round the world.

That vital transition from targets and aims to real achievements is the great challenge for globalisation.

Across the board – on trade, environment and poverty reduction – the international community is setting itself a difficult task.

With almost 200 countries in the world, there are 200 voices to be heard, all with their own priorities.

It is a huge challenge for we politicians to secure consensus on these major issues.

We need to negotiate the stepping stones from Doha to Monterrey to Johannesburg where leaders from around the world gather to revitalise the global effort for sustainable development.

One of my purposes in coming to Australia – and indeed in America and New Zealand where I’ve just come from and Malaysia and Vietnam where I go next – is to raise the profile amongst other issues of the Johannesburg Summit and to encourage political representation at the highest level.

We want Johannesburg to be about celebrating success on the road from Stockholm 30 years ago, and from Rio 10 years ago. We must continue moving forward.

Recent experience shows:

• that the pace of change has quickened,
• that there is a greater willingness to find consensus
• that there are fewer divisions between north and south
• and that every day the world becomes more and more a global village.

I know that in Australia you have doubts about global environmental agreements. But even in America business is increasingly active on the environment and recognises that environmental improvements can be achieved by gain not pain.

Let us hope that we can continue to secure agreements on sustainable development and the environment with ever greater speed and commitment.

Let us make that Summit our first big milestone in winning the peace and shaping a new world order.

It is the very least we need to do for our children and our children’s children - and to meet the obligation on all of us to pass on the world in a better state than we found it.

That can only be done by global consensus, global delivery and a global alliance.