Australia’s history of proactive participation in global arrangements, from the founding of the United Nations to innovation in the GATT/WTO, has raised expectations that it can energise the G20 process at a time when the world sorely needs new direction. If these expectations are to be realised, of course, it will be important to appeal beyond the troika to the whole G20 constituency.
The G20’s agenda is primarily economic: an organisation that was elevated to summit status from being a forum of finance ministers and central bankers, in 2008, to deal with the global financial crisis. The development of an effective, coordinated response by G20 members to the crisis that prevented the global economy from slipping into a recession which promised to match the disaster of the Great Depression in the 1930s, has distinguished the G20 as one of the most successful efforts in international cooperation in history. While the crisis is far from over — with unemployment, especially of the young, still at all-time highs, growth yet to gain traction in Europe, and the US economy still struggling to gain real momentum — there is a strong sense that the G20 has yet to find its way beyond crisis-management.
When leaders gather at G20 summits, they obviously don’t do so in an international political vacuum. The last summit in St Petersburg was surrounded by managing the unfolding crisis in Syria. Geopolitical security issues have potential to undermine or bolster cooperation and consensual outcomes. Nowhere is this clearer than in Asia, which is a bull element in the global economy but is beset by political tensions between major players. In its presidency a peculiar responsibility will rest upon Australia to lift the focus on economic reform and international cooperation, and shared over divisive interests, regionally and globally.
It is argued, with some merit, that leadership in these affairs by a middle power such as Australia has the potential to deliver more than leadership by one of the major players. Middle powers represent more than themselves and their narrow self-interest in global affairs. They tend to place multilateralism at the centre of their foreign policies, nesting their national interests with broader regional or global interests. As a result, middle powers tend to inculcate a higher level of trust than larger powers. The United States and China, for example, find the G20 a comfortable setting in which to work through global issues of consequence to them in light of the interests and perspectives of other, smaller players.
In many ways, the G20 summit mechanism forces all member countries to behave like middle powers, which are in the majority. But Australia — if it can use the assets it has with the United States and Europe as well as in Asia, and call on the trust and confidence it can command in Africa, Latin America and the Middle East — is in a strong position, many believe, to make a difference to G20 outcomes. This may look like a tall order for a new Australian government still finding its way in its international dealings. But the ambition is there, and how well Australia measures up will be of crucial importance to its government, domestically as well as internationally.
In this week’s lead essay, Colin Bradford reflects on the priorities that an ANU-Brookings Institution project on the ‘G20 at Five’ — the fifth anniversary of the first Washington summit was 14–15 November — identified for Australia in 2014.
The Brisbane summit, Bradford suggests, is an important opportunity for Australia to affirm the G20 as the premier forum for providing strategic guidance of the global economy and major global issues. Australia needs the G20 summit to succeed in order to guarantee its continued role in the global economic rule-making process.
With the global recovery expected to remain fragile, the G20 needs to present a credible public message on boosting economic and jobs growth.
‘The global economy is currently over-reliant on monetary expansion to stimulate economic growth and under-using fiscal expansion measures in countries that could afford it’, writes Bradford. There is good evidence that stronger fiscal policies can generate better social outcomes as well as spur growth, by reducing poverty, inequality, unemployment and domestic conflict.
Promoting polices that will help support short-term demand while they improve longer-term growth prospects, including implementing financial reforms already agreed to by G20 countries that would create a climate for investment-led growth, is a priority. So too are increased infrastructure investment and structural (including trade and taxation) reform.
Greater infrastructure investment leading to sustainable economic growth and greater global economic development should be the central pillar of the G20 agenda, demonstrating a global priority on private sector growth for greater job creation. Increased well-targeted infrastructure investment can be funded through a number of ways. They include: fiscally prudent public spending; greater use of private infrastructure investment funds; and the activation of programs run by multilateral financial institutions. This multipronged approach will generate momentum and synergies for greater job growth.
The reform agenda for Asian infrastructure projects provides a guide to how this could occur. The Asian Development Bank has identified US$8 trillion of national infrastructure projects and more for trans-border projects. APEC is leading initiatives to accelerate these projects and ensure they are delivered. These initiatives should include strengthening financial channels, establishing an Asia Infrastructure Bank with Chinese backing, and gaining commitments to structural reform.
The G20 has an important role to play in leading the way on strengthening global rules, especially for the global trading system. Maintaining open global trade and investment is fundamental to the global economic recovery. Emerging economies also need more open trade and investment regimes to join international production networks and value chains. While the WTO is the anchor of open trade, it needs renovating, and a stronger regime for investment put in place.
This pro-growth agenda for G20 countries — implementing financial reforms for enhancing investment, and prioritising infrastructure investment and structural reform — can also engage China, as it is an agenda that matches Chinese reform priorities. Developing a clear reform agenda that China endorses will strengthen the G20 and align with Australia’s interests in China’s APEC year.
This is a challenging agenda, but it is an agenda, as Bradford concludes, that Australia’s new government is placed to deliver.
No mention of international climate change effective action and targeting! The last sentence (“This is a challenging agenda, but it is an agenda, as Bradford concludes, that Australia’s new government is placed to deliver”) is not one I would agree with in regard to one common G20 policy area – the need to coordinate and accelerate climate change action by 2015 and sort out Kyoto and the recent acts of several revisionist developed countries (Canada, Australia and Japan). I can’t imagine an Abbott Govt playing a positive role here. I can imagine a spoiler’s role, which will only lead to a diminishing international role in the near and medium term.