Australian PM Warns G-20 Members Against Missing Growth Target
Members of the Group of 20 major developed and emerging economies need to improve their draft “national growth strategies” if they hope to reach their collective economic growth target, Australian Prime Minister Tony Abbott urged last week. Leaders are set to present these national plans when they meet in Brisbane later this year.
Back in February, G-20 finance chiefs set a joint goal of achieving two percent GDP growth above current trajectories – amounting to an estimated US$2 trillion – over the next five years. Members of the group would, however, develop national-level plans for doing so, which will then be reviewed during the leaders’ summit planned for this November. (See Bridges Weekly, 27 February 2014)
So far, the Australian premier said last Thursday, initial signs from his G-20 partners have been promising, with countries working to elaborate their national growth strategies ahead of the Brisbane meet.
However, despite these draft plans containing “several hundred” potential measures, “quantity does not always equal quality,” he told business leaders from the B-20 forum, which provides policy recommendations to the G-20 on the business community’s behalf.
“Current estimates suggest that the proposed growth strategies will deliver about half of the extra growth required to meet the two percent target and to create the wealth and the jobs that we all seek,” Abbott said.
Trade measures are expected to feature heavily in the packages, particularly given the Australian leader’s pledge to put trade foremost in his G-20 agenda. This past weekend in Sydney, trade ministers from the G-20 group met to evaluate the trade packages that have been put forward so far by the coalition’s individual members, along with the B-20’s recommendations in this area.
While welcoming the draft country contributions so far, a chairman’s summary released following the meeting urged G-20 members “to make further contributions to support trade as part of the Brisbane Action Plan,” noting that the practical outcomes in such contributions must respond to the need to bring trade flows back to their pre-crisis levels.
Australian Trade Minister Andrew Robb, who hosted the trade ministers’ meet, told reporters on Saturday that “there’s no doubt we agreed today… that some countries had fallen short,” without naming any specifically.
Joe Hockey, Australia’s Finance Minister, already warned earlier this year that he would “name and shame” fellow G-20 members if necessary, should their national strategies not prove sufficiently ambitious.
With the economic recovery still fragile, the stakes for this year’s summit are particularly high for the Australian leader, who holds the rotating chairmanship for the group. The G-20 economies together make up over 85 percent of global GDP and over 75 percent of global trade.
During the early years of the global financial crisis, the G-20 dubbed itself the “premier forum” for economic cooperation, a pledge that has since sparked question over what the group’s agenda should tackle and whether the non-binding commitments its members take on do indeed lead to tangible results.
“The early impact of the G-20, still in its infancy, was world-changing,” said Heather Smith, Australia’s Sherpa for the G-20, in a speech in Ottawa earlier this month. “But its early success has raised the rather unrealistic expectation that the G-20 will deliver something big every year…So the test of G20 effectiveness going forward is in its adaptiveness.”
Abbott, who took office in September, had pledged in Davos earlier this year that this November’s G-20 would be “more than a talkfest,” and promised that the group would hold a “frank leaders-only discussion” that would keep a tight focus on issues such as trade, combatting tax avoidance, and improving infrastructure. (See Bridges Weekly, 30 January 2014)
The end result of these discussions, he said, would be a three-page communiqué in “plain language” that would focus less on good intentions and more on how to put these intentions into practice.
“Australia’s task is to keep the G-20 tightly focused on higher economic growth and to resist the temptation to deal with every ill that the world may face,” Abbott stressed to business leaders last week. “Sure, many of those ills desperately do need addressing, but in other forums, not the G-20 which is primarily an economic one.”
Climate change show-down?
Canberra’s repeal last week of its controversial carbon tax, the Australian premier said in Sydney, is one way his country is trying to make it easier for businesses to invest and work in his country and thus increase growth. (17 July 2014)
That same decision, however, is expected to pit Australia against some of its G-20 partners, such as the US, given that President Barack Obama has said that he prefers carbon pricing as a strategy to combat climate change. (See Bridges Weekly, 12 June 2014)
Obama is expected to insist that climate change be part of the G-20 agenda, with his country’s ambassador to Australia saying last month that the US’ sherpas are already pushing the issue.
Climate change, Ambassador John Berry said at the time, is an issue “the United States will raise in every international forum,” noting that the Obama Administration believes that climate change can be addressed in a way that minimises damage to the economy.
Australian Sherpa Heather Smith has said that, while the G-20 will push to give global climate talks more momentum, as in past years, there is no consensus among the group’s members to do anything beyond climate financing or green infrastructure investment.
“You have to find consensus where there is consensus, and there is no consensus in the G-20 to do anything beyond those areas I’ve mentioned,” she said earlier this month, in comments reported by Reuters.
ICTSD reporting; “Australian PM Abbott says falling short on G20 growth target,” REUTERS, 17 July 2014; “US will push for climate change at G20,” HERALD SUN, 30 June 2014; “CORRECTED-Australia seeks limited G20 appetite on new climate change steps,” REUTERS, 2 July 2014; “Australia dragging chain on G20's global tax crackdown,” SYDNEY MORNING HERALD, 23 June 2014.