The starter's gun has fired on Australia's G20 presidency. It was a low key start.
The Prime Minister's media release was very brief. This is a positive. The G20 should always be business-like, with the focus on achieving substantive outcomes rather than on the event itself. Start to worry if we hear plans for fireworks displays or cultural performances at the Brisbane Summit.
Australia has released an overview for its G20 presidency. It is also commendably brief. Let's hope this brevity is maintained throughout 2014, particularly when it comes to leaders' declarations and communiques. But of course it is always a lot easier to write a short statement when there is something of substance to say.
Australia's stated theme for the G20 in 2014 is appropriate: promote stronger economies and jobs growth and build a more resilient global economy.
But the Brisbane summit will not be remembered for fine-sounding objectives. Its legacy, and Australia's reputation as chair, will depend on delivering on the task identified by the Prime Minister in his introduction to the overview, namely that 'the challenge of the G20 this year will be to make concrete decisions and take real steps that will improve people's lives.' This hits the nail on the head.
One positive aspect of the outline of 2014 priorities is that Australia is not placing additional items on the G20's agenda. However, it is not clear from the overview document how Australia will prioritise the 10 listed agenda items. The description of each agenda item in the overview document is very general.[fold]
The strategies to promote growth that are mentioned — improving productivity and competitiveness, strengthening investment in infrastructure, making it easier to do business — do not require international agreements. Their implementation will depend on the policy choices taken by each G20 member. And as is clearly evident in the case of the US, the major impediment to their implementation is domestic politics. Of course, all countries will benefit if the major economies take the necessary steps to lift their growth rates.
What is absent from Australia's overview for the G20 in 2014 is the need to deal with negative spillovers — where the actions of one country can have profound impacts elsewhere. As identified by the IMF, policy spillovers may well turn negative in 2014, particularly with the exit from quantitative easing by central banks in some of the major economies. With the volatility that may come from the tapering of quantitative easing likely to be a major concern for emerging markets in 2014, it is unfortunate that there is no mention of this, even in general terms, in Australia's outline for the G20.
The overview document also does not indicate where Australia will be seeking concrete decisions in the areas that clearly require international cooperation, particularly international trade and tax.
The document says that the G20 will focus on removing 'obstacles to trade', but there is no mention of the future of the multilateral trade negotiations and the WTO.
It is laudable that Australia has indicated that it will lead stronger international cooperation to combat tax evasion and profit shifting, but there is no indication as to what it will attempt to do in this area in 2014. And it is difficult to reconcile the Prime Minister's comments that cutting taxes will be on the G20's agenda in 2014, for the tax challenges facing G20 members vary depending on their domestic circumstances and efforts to achieve sustainable fiscal positions.
One clear objective is identified in the overview document: a priority to 'complete' reforms aimed at strengthening financial regulation in four areas. These are: building the resilience of banks; helping prevent and manage the failure of globally important financial institutions; making derivatives markets safer; and improving oversight of the shadow banking sector.
The greater challenge, however, is ensuring the consistent domestic implementation of new financial standards. More generally, there is a pressing need for the G20 to be more strategic in its assessment of whether the Financial Stability Board's efforts to strengthen financial regulations are contributing to more stable financial systems that meet the needs of the real economy.
Strengthening energy markets gets a mention in Australia's G20 overview, but there is a conspicuous absence of any reference to dealing with climate change. Climate change is on the G20 agenda and Australia cannot ignore the issue as chair.
Australia is at the start of a busy year and it is to be hoped that it will deliver in ensuring that the G20 achieves concrete results on some key international economic issues. But we are still waiting to see what will be the few specific areas where Australia will be seeking to make a major contribution as G20 chair.