hard - saved capital from developing economies to the rich world. it was very much a second - best option but was pursued because first - best seemed unachievable. so it is in the interests of many developing countries to alter their growth strategy, but to do so they need confidence in the international system – its rules, governance, safety nets and so on. at the same time, the countries that have dominated the governance arrangements hitherto, and which will have to accommodate the emerging countries, will want to have some confidence that we are all – emerging markets and developed countries alike – reading from the same page about the role and responsibilities of the international financial institutions and their member states. australia and canada have a shared interest in fostering progress on these fronts, which will involve encouraging both emerging countries and highly developed countries to move in ways that accommodate each other. i know my canadian counterparts have worked assiduously on these issues for many years. we support those efforts. thirdly, much work is being done on the lessons we can learn from this episode for financial regulation and structure. as countries whose financial and regulatory systems have performed pretty well in this episode, and which are largely free of serious problems, australia and canada are perhaps uniquely placed to contribute to the discussion. i think we could hope to bring a sense of emotional detachment, balance and perspective to the international discussions on regulatory reform, which can be quite heated at times. conclusion the “ great white north ” and the “ great south land ” have much in common, as well as some very informative differences. sound policy frameworks and robust business sectors are being tested at present, but they can meet the test. we both certainly have, at this juncture, much at stake in the global economy recovering to a path of balanced growth, with open markets and sustainable policy settings. there is plenty we can do together to promote our common interests in the world, as well as our own interaction. part of this sharing of ideas and co - operation will be spurred on by forums such as this one. i wish you every success.

position we have had turns out, contrary to what most would have expected 25 years ago, to have been manageable and sustainable. a temporarily larger one would probably be so as well, provided it involved a relatively modest amount of currency mismatch, and a rise in investment as opposed to a reduction in saving – and that seems to be the likely shape of things. in fact a temporarily sizeable current account deficit, if characterised by equity - type capital inflow, may well be optimal, because it would mean that a good deal of the risk of the projects was being shared with foreign investors, and that makes sense. why would australians alone take on all the risk of these massive projects? it is probably more sensible to share the risks with global capital markets and global companies. but these trends will take some explaining, not least to foreign and international organisations, many of which have a more traditional view of current account positions. our explanation to our own citizens will also be important, and not just about capital flows. over time, if the resources sector is to grow as a share of the economy, as seems likely, other areas will by definition shrink. this does not necessarily mean that they will shrink in absolute terms, particularly given the population is growing quickly, but certainly their growth prospects would be weaker than in an alternative state of the world in which the resources sector was to remain at its historical size. it follows that adjustment challenges will arise, with industrial and geographical implications. the “ two - speed economy ” debate of a few years ago was really only a preview of what we could see if the resources sector build - up goes ahead. a further implication is that the economy ’ s trade patterns could end up becoming less diversified than they have been in recent years. such concentration would not be unprecedented and may well be worth accepting if the returns from doing so were high enough, as it appears they might be. but we might also think about how to manage the risks associated with any concentration. the emergence of china and india is a benefit to australia, but we stand to have a heightened exposure to anything going seriously wrong in those countries. how then to manage an income flow that is higher on average, over a long period, but potentially more volatile? the answer to that question is beyond my brief today but presumably involves thinking about the extent and form of saving by the community. conclusion as we look forward to a new expansion, australia has many advantages. the financial sector remains in pretty good shape. the