Australia will spend over $500m hosting this year’s G20 meetings. In the world of ordinary taxpayers, that is a lot of money that could otherwise be spent in the nation’s schools, hospitals or other worthwhile purposes. So what are the benefits of the G20, and can the world’s self-described “premier economic forum” justify its existence? Established in 1998, the G20 came into its own a decade later during the global financial crisis. The formation of the G20 leaders summit with its initial meetings in Washington and London six months apart in 2008 and 2009 made substantial progress in averting a deeper global economic meltdown. The Washington summit agreed to a 47-point action plan that established common principles for reform of financial markets – some leaders would describe it as Bretton Woods II. The London summit agreed on $5 trillion of stimulus and a $1.1 trillion package for the International Monetary Fund and World Bank. But in the six leaders’ summits that have been held since London, the G20 has struggled to agree on concrete measures, and member countries have a woeful track record of implementing agreed actions. The most common explanation for this failure is the absence of a global crisis to catalyse countries to accept and implement change. But the Eurozone crisis from late 2009 onwards and the sustained slump in many G20 economies has challenged this theory, suggesting the G20’s problems run much deeper. In terms of size and geography, the G20 was initially seen as being a “goldilocks forum”. It was not too big (like the UN) or too small (like the G8). The inclusion of emerging giants like China and India and a good geographic spread that included countries from Latin America and Africa reflected a bigger more interconnected global economy. But unfortunately, the G20 now suffers from the same afflictions as many transnational forums. To begin with, there are simply too many diverse and competing interests at the table, making it very difficult to get agreement on real reform. Participants report the sheer size of the forum prevents spontaneous discussion with sterile debates as everyone sticks to the script of narrow national self-interest. The second major issue is that G20 does not have a secretariat or any mechanism to compel countries to implement agreed reforms, other than pressure from the rotating G20 president or their peers around the summit table. Australia has chosen to use the presidency of the G20 to narrow the agenda and concentrate on economic issues. The centrepiece is a commitment by G20 members to domestic policy initiatives that will raise the level of G20 output by at least 2% above the currently projected level in the next five years. After the recent G20 finance ministers meeting in Cairns, it was announced the IMF and OECD had assessed over 900 policy initiatives from G20 members and concluded they will add 1.8% to the global economy. Australia’s treasurer Joe Hockey was quick to claim the result as a major triumph that will boost global GDP by $2 trillion and generate millions of new jobs. The problem, of course, is that the boost to growth will only occur if the reforms are actually implemented by member countries. And the recent track record of the G20 would suggest this sort of lofty rhetoric is never matched by practical results, and the only initiatives that are implemented are those that would have occurred in any case. The fact that the 900 policy initiatives have not been released publicly does not instil confidence that this time will be any different. A second major policy test for the Brisbane summit is whether G20 members can tackle tax avoidance by transnational companies through base erosion and profit shifting (BEPS). The issue has been talked about at G20 meetings for the last five years. The talk needs to be replaced by bold action to stop profit shifting, tax income where it is earned, and increase transparency including in emerging economies. A third major agenda item is the delivery of real reform for the global financial sector. The G20 received praise for introducing emergency-type measures to stem the impact of the GFC. But the world economy remains fragile, particularly with respect to global finance. The G20 must take the next step and focus on the underlying causes of that instability and take the decisions and actions necessary to mitigate against another GFC. Finally, while the narrowing of the Brisbane Summit agenda makes sense on one level, it is still very disappointing that key issues such as the economic consequences of climate change are not scheduled to be discussed. The G20 Brisbane Summit is a perfect forum for the world’s leading industrial nations to discuss the state of climate action in the lead up to next year’s all-important global climate summit in Paris. If the history of the G20 was written today, it would be a story about a forum that lost its way once the immediate danger of the GFC passed in 2009. In this version of history, Australians will wonder why their government spent $500m hosting a pointless talkfest. A more positive version of this story could be that after some initial success the G20 process stalled but then regaining its mojo. The Brisbane summit must prove the relevance and influence of the G20. It is time to deliver or disband. So the world can continue the search for a global forum that is fit for purpose for a global age. And to spare the poor tax payers of Turkey a $500m bill, if the G20 comes to town in 2015 as scheduled. A longer version of this article was originally published by the Melbourne School of Government at the website G20 Watch theguardian/commentisfree/2014/oct/17/the-g20-in-brisbane-a-500m-talkfest?CMP=soc_567
Posted on: Fri, 17 Oct 2014 13:29:37 +0000
Trending Topics
Recently Viewed Topics
© 2015