Delivering growth but protecting economies: our G20 conundrum

Tony Abbott has announced his priorities for the G20 in Brisbane next year. AAP

With Russia handing the G20 host baton to Australia this month, and combined with our UN Security Council seat, the biggest year of Australian diplomacy begins.

Prime Minister Tony Abbott had a backdrop of the Brisbane River and the Story Bridge behind him as he told the world: “The G20 will be the most important meeting of world leaders Australia has ever hosted. I want it to make a lasting difference”.

Australians now have an opportunity to really digest and respond to the Australian priorities, set out here.

Briefly, Australia is focused on two themes:

  1. Strategies to Stimulate Growth - described as “practical actions to improve productivity and competitiveness, strengthen investment in infrastructure, encourage trade, make it easier to do business and boost employment”.
  2. Building Global Economic Resilience - described as “international and domestic economic policies work together to immunise the global economy against future shocks.”

Nothing new has been added to the already large G20 agenda, but some good attempts have been made to package the areas and add some coherence to the leaders’ stream.

The flavour of the overview document is that private capital will save us all, that “only private enterprise can deliver the sustainable growth in investment, trade and job creation that the world needs”. This underscores the “Australia is open for business” line of the Abbott Government and will be music to the ears of the B20, the business leaders who play an insider partnership role with the G20. But it is potentially at odds with the second theme of protecting the global economy from future shocks through the regulation of global finance.

In Brisbane next year the G20 will try to “get the job done” and implement the agreements from the London Summit in 2009 to improve financial stability through banking regulation and oversight; resolution regimes for the “too big to fail banks” (in short, they need to bail themselves out next time); making derivatives markets safer; and improving oversight of the shadow banking sector.

Tax evasion

The leaders will also try to curb corporate tax evasion which is affecting the revenue base of states on a massive scale. To my mind, this will be the most important work Australia can lead as host, and achievable. Striking the balance between sustainable and inclusive economic growth; and social cohesion and planetary boundaries is where the debate should be.

One of the most controversial areas under “Strategies to Stimulate Growth” will be private investment in infrastructure: with the aim to “…help capital markets to better channel global savings to productive investments, including by sharpening the role of Multilateral Development Banks in assisting this process”.

Investing in infrastructure

Harnessing public-private partnerships to invest in infrastructure that delivers economic growth and public goods has been much discussed, especially in our region, but extraordinarily difficult to achieve. ASEAN and APEC are very engaged in debates about attracting pension funds to invest in infrastructure, but these debates rarely feature social infrastructure such as schools and hospitals.

Emerging economies have the ability to use technology to “leapfrog” mistakes made by developed economies, such as in telecommunications (mobiles versus landlines) and renewable energy. Infrastructure without social analysis or sufficient regulatory oversight can lead to bridges to nowhere, the spread of disease, or the displacement of vulnerable communities. These G20 discussions should not ignore the lessons learnt about environmental and social safeguards.

Large infrastructure projects are an exercise in governance and state regulation, and so the idea of responsible infrastructure and the related anti-corruption and transparency agenda of the G20 may receive more attention.

Climate change and climate finance are entirely absent from the overview, with some scant mention of energy efficiency - this is an exclusion that will attract some comment.

Australia’s other areas of focus include:

  • Trade: “…practical actions to remove obstacles to trade and enhance countries’ ability to participate in global value chains through domestic reform.”

  • Employment: “Creating the right conditions for private enterprise to grow is the key to boosting employment and lifting participation.” Issues will include “female participation, structural unemployment, informal employment, and labor market outcomes for young people and vulnerable groups.”

  • Empowering development: “…link development actions to growth, by creating the conditions for developing countries to attract infrastructure investment, by strengthening tax systems, and by improving access to financial services.”

The starting gun has sounded and we are off to a good start, balancing global leadership with communicating to citizens. But for the love of god, can we take the stamp competition off the G20 homepage?

The G20’s mission

There was also a message from Abbott to Australian citizens, and the many Brisbane residents who are wondering what will hit them next November when 25 world leaders, 4,000 delegates and 3,000 media representatives will descend. Not to mention the 15 meetings so far scheduled Sydney, Cairns, Uluru, Washington and Canberra, in the lead-up to the Summit.

“So why is the G20 important? It comes down to a simple idea: the world’s major governments can do more economic good for our citizens when we work together. That is what the G20 Leaders Summit is about.”

This is a good message - the G20 is about coordination of the world’s biggest economies to promote growth and prevent future crises. What the G20 has never been very good at is explaining that mission to citizens in G20 countries and being clear about what domestic actions will be taken to this end, and how this accountability will be demonstrated.

Citizens may also have opinions about what sacrifices have to be made in order to achieve growth and who has to make these sacrifices, or who should reap the benefits of growth.

As the host, Australia can make a real contribution by increasing the amount of accessible public information about the G20, and the new website is a great start, as is the C20 process in which all of us can nominate our priorities.

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