Australian Liberal leader defends capitalism's achievements during red carpet trip to London

The Leader of Australia's Liberal Party, Malcolm Turnbull, has been in London this week. He has met all of the key figures in David Cameron's Conservative Party, including an hour long meeting with David Cameron, George Osborne and William Hague. There is probably no closer relationship between any two conservative parties in the world and it is now the UK Tories - on the edge of power - who are repaying the enormous help that the Australian Liberals gave them when them when John Howard was Prime Minister.

Mr Turnbull, trailing in opinion polls back home, gave a major speech during his visit to the Policy Exchange think tank. It was standing room only on Tuesday night to hear the Liberal leader, wearing R M Williams boots, give a stout defence of free enterprise. He began by noting that Australian Prime Minister, Kevin Rudd, had vowed to put government at the centre of the economy.

Mr Turnbull listed the achievements of capitalism before warning against the dangers of government being at the centre of economic life. He argued that capitalism had had a transformational effect on world poverty over the last thirty years and government intervention had been at the heart of the last year's banking crisis:

"Throughout the 20th century, the strongest and most successful, most vibrant, most interesting societies were those infused with the principles of political, economic and religious freedom. The best-performing economies were those where citizens were given the maximum incentive, under the rule of law, to make the choices they considered best for themselves and their families. This is not a matter of ideology of faith. It is an unassailable fact of history. The Berlin Wall did not fall by accident. It fell because millions of people living in societies crippled by the failures of excessive government control yearned for the freedoms they saw in the West. The socialisation of the means of production and distribution had manifestly failed them, and they aspired to something better...

There have been few periods in human history where we have witnessed, in the space of a single generation, such enormous economic advances across so much of the world. Many hundreds of millions of people have been lifted out of poverty, as great and ancient societies such as India and even the world’s largest Communist state, the People’s Republic of China, opened their economies to global trade, accepting that free market has a great deal to offer, the principles of the free market has a great deal to offer. The freest societies have proved themselves prosperous, creative and dynamic, while societies which restrict freedom have been paralysed by social and economic failure – the most extreme contemporary example being North Korea – but history abounds with others. The fruits of greater economic freedom have been spectacular – in the 20 years to 2004 the percentage of the world’s poor living on $1 a day or less halved. That is a quantum leap by any measure, on any conceivable index of human happiness. And it is a record of achievement, a measure of progress, not to be demeaned or dismissed in the scramble to find scapegoats for last year’s collapse of confidence in global financial markets...

What has happened in this past year does not as Kevin Rudd has claimed demonstrate that the ”neo-liberal experiment of the last thirty years has failed”. Now I should note at the outset the absurdity of declaring a failure of capitalism because of a crisis in one industry sector alone and of course there will be libraries built to fill the books written on the global financial crisis and its causes. But we should note that it was a crisis in the banking sector which had it origins in the United States property market, where an asset bubble was fuelled by imprudent, sub-prime lending to people whom banks would not normally have rated as creditworthy.  In other words, loans were being made to people whose best, if not only, prospect of repaying the loan was out of the sale or refinancing of the house, which in turn depended on the value of the house rising materially. Far from being a product of unbridled ”free market extremism,” as Mr Rudd is fond to say, this irresponsible lending could not have occurred had it not been for the fact that the United States Government, in the shape of Fannie Mae and Freddie Mac, was actually underwriting two thirds of the entire mortgage market.."

Download a PDF of Malcolm Turnbull's full address.

During Q&A Mr Turnbull expressed his "admiration" for David Cameron and said that he admired the way he had broadened conservatism's appeal.

He confirmed that he was still a republican but did not see Australia choosing to alter its constitutional status until the present Queen's death.  That will be a "watershed moment", he said.