Thank you for the opportunity to speak to you.
Exactly one month from today, this year’s G20 Summit will be wrapping up in Buenos Aires.
My job as Australia’s G20 Sherpa is to make sure that the Leaders’ Summit is as productive as possible for Prime Minister Morrison and Australia.
While the Summit is the culmination of Argentina’s host year, this year also marks a broader milestone for the G20 – ten years since its elevation to a Leaders’ meeting.
Why is this an anniversary worth remarking upon?
Because in those ten years we have seen something impressive happen.
All G20 leaders attend G20 summit meetings – almost without exception. Nations, some with conflicting interests, continue to send their leaders to gather to discuss issues of relevance to them and, at times, to set the direction for the global economy.
We have seen goodwill between these countries from all over the world, with different levels of development and cultural traditions.
And we have seen critical global issues confronted and often faced with joint resolve.
When Argentina was selected as 2018 host at the 2016 Hangzhou Summit, then newly-elected President Macri had no way to anticipate the profound macroeconomic difficulties Argentina now faces.
The international consensus on key issues has also fractured.
The Hangzhou Statement agreed on a “rules-based, transparent, non-discriminatory, open and inclusive multilateral trading system with the World Trade Organization playing the central role in today's global trade”.
Further, G20 Leaders committed “to complete [our] respective domestic procedures in order to join the Paris Agreement”.
At the time, it would have been a brave prediction that two years later these issues of trade and climate would become the two most contentious and contested issues facing the G20.
Argentina’s challenge, as well as delivering new initiatives, is to seek as much agreement as possible among G20 Leaders on these contentious issues.
From its role in the global financial crisis to the current tensions, the G20 is perhaps best thought of as an institution that comes into its own when it is most needed — more a ‘rough weather’ friend, than a ‘fair weather’ one.
Today I want to explore aspects of the G20’s past, celebrate its progress, and share my thinking about its prospects as we prepare for the Buenos Aires Summit.
I’ll come back to trade at the end.
We live in a multi-polar world
I am the first to acknowledge that the G20 cannot be a panacea for the world’s problems.
But over the past 10 years the G20 has been an important forum for international cooperation — indeed, in Toronto in 2010, leaders declared it to be the premier forum for global economic co‑operation.
This co-operation is mostly in the form of discussion but also, at times, decision-making, made possible and credible by its diverse membership.
The G20 includes the G7, all five permanent members of the UN Security Council, and all five emerging economy ‘BRICS’ – Brazil, Russia, India, China, and South Africa.
Members collectively make up nearly 85 per cent of global economic output, 84 per cent of global investment and 63 per cent of the world’s population.
We have never really had a forum like it.
Declaring it as the premier forum for global economic co‑operation was a profound statement about the G20’s role in a rapidly changing global landscape.
The G20 has shown itself to be a strategic tool.
When used effectively, the G20 has delivered significant results.
Let me summarise some of these results.
Through it, member countries have:
- Coordinated discretionary fiscal stimulus that averaged over 2 per cent of GDP in both 2009 and 2010.
- Facilitated an increase in lending from multilateral development banks of US$235 billion at a time when private sector sources of finance were diminished.
- Driven reforms to the international tax system, through the G20/OECD Base Erosion and Profit Shifting (BEPS) project and implementation of tax transparency standards.
- And played a critical role in the ratification of the Trade Facilitation Agreement, with the WTO estimating it could contribute up to somewhere between 5.4 and 8.7 per cent to global GDP by 2030 if the agreement were fully implemented. 
The G20’s current agenda is just as important as its past achievements.
It has committed to reduce the gap between male and female workforce participation by 25 per cent by the year 2025, which would add more than 100 million women to the global labour force.
And it is working to reduce the cost of remittances to an average of 3 per cent by 2030 (consistent with the Sustainable Development Goals), which, at a minimum, would give an extra US$25 billion per year by 2030 to the people who need it most.
Now, you don’t need a global leadership forum in a unipolar world.
The British Empire offered no other vehicle for collective representation of the colonies — beyond perhaps the Empire Games.
When you have a single superpower, coordination of global policy becomes relatively simple.
Addressing globally significant issues is in their own interests.
In 1950, shortly after WWII, the United States accounted for 27 percent of global GDP. 
No matter where in the world economic activity occurred, it is likely that someone in the United States benefited.
This gave the US a clear interest in developing and supporting an open global trading and investment system.
But as other countries grew to challenge US pre-eminence, the incentive for the US to bear the burden of coordinating the global economy became less compelling.
What is true of the US is also true more broadly of the G7.
The G7 countries comprised around half of global GDP for the whole twentieth century up until 1991. Since then, the G7 share has steadily declined.
This year, the G7 is likely to comprise only 30 per cent of the world economy; by 2040, it is projected to fall below one-quarter. 
By contrast, the G20 countries account for around four-fifths of the world economy – and will still account for about that share in 2040.
The case for a broader grouping beyond the traditional advanced countries rests on the rapidly rising economic importance of countries beyond the G7.
Today’s economic cooperation translates into growth a generation from now — G7 countries will comprise only 8.8 percent of the global population in 2040, the G20 will make up 57 percent.
In this world, we can no longer expect one state to set the terms for all others, nor underwrite global institutions alone.
Effective global governance, including through fora like the G20, is essential as rising powers seek opportunities to influence and contribute to the global order.
What should the G20 do?
While governments have the sovereign right to set their policies with little, if any, reference to other states, there are some fundamental areas where the global economic commons need protecting — and there is no body better placed to help than the G20.
The G20’s toolkit ranges from simple exchanges of information and best practices, to agreeing common, measurable targets, to coordinated action.
None of this is achieved without consensus, nor is it enforceable, except for the incentive of peer review and public accountability.
The ambition of the G20 will wax and wane with the interests of the membership in collectively addressing economic challenges.
Sometimes it will be limited to discussions amongst leaders and officials.
However, this is not nothing.
Thomas Schelling, in his great book ‘The Strategy of Conflict’, highlighted how conflict itself can arise from coordination failure.
If countries understand one another’s objectives and capabilities, there is less rationale for conflict.
For this, of course, you need communication.
Schelling’s perspective led directly to the emergency phone line connecting Cold War Washington and Moscow.
The G20 gives us more than just phone connections.
There is real camaraderie, understanding and a spirit of compromise among Sherpas — borne from long hours working on a wide range of sometimes contentious issues, and seeking to achieve as much agreement as possible.
Indeed, when surveyed by Adam Triggs at the Brookings Institute, G20 policymakers commonly reported that the G20’s value lay in building working relationships and networks, and in better understanding each other’s perspectives.
Specifically, it ensured that policymakers knew who to call in the event of a crisis.
These benefits rarely appeal to the popular press, hungry for instant gratification, but the long‑run benefits should not be ignored.
Not to mention that, with a rotating chairing arrangement, members bring a sense of goodwill in the expectation that others will afford them the same courtesy during their host year.
So improving communication is one way to reduce coordination failures, as is the opportunity created for leaders to move beyond talk and commit to action.
Without question, the highpoint of G20 effectiveness so far was when they did just that during the Global Financial Crisis.
Past: the G20 at one
The G20 leaders’ meeting exists as a direct result of the fear, desperation and waste of the GFC.
At the point of the G20’s conception, credit markets were freezing, stock markets tumbling and financial firms collapsing.
Over the 12 months from April 2008 to April 2009, the IMF’s forecast for 2009 global growth fell from 3.8 to negative1.3 percent.
In their first ever communiqué, agreed in Washington in November 2008, G20 leaders concluded that only enhanced cooperation would restore global growth and achieve needed reforms.
At the time, and perhaps more so since, there are many views about what caused the GFC and how it should have been managed.
Yet the economics is quite orthodox.
Because we have a global economy, when one country uses fiscal expansion to stimulate spending in their own economy, some of the benefit leaks across borders.
China’s stimulus of 3.1 per cent of GDP in 2009 and 2.7 per cent of GDP in 2010 boosted investment in China, but also drove commodity production in Australia.
Global cooperation can help ensure every country does its bit and is therefore more effective at responding to and recovering from a global downturn than countries acting alone.
For monetary policy, the effect of a stimulus on other countries can be the opposite.
Lower interest rates raise investment and consumption, but they also boost exports and inhibit imports by lowering the exchange rate, which reduces growth in other countries.
Elements of this happened during the Great Depression. Perceptions that the UK, US and France were each trying to ‘beggar thy neighbour’ through currency devaluations contributed to the Depression.
As the GFC was gathering in intensity, the key global leaders were acutely aware of that history, and determined not to repeat it, when they elevated the G20 to a leaders’ meeting.
Many see avoiding a shift into 1930s protectionism and the Great Recession becoming another Great Depression as the crowning achievement of the G20.
The subsequent G20 agenda involved re-equipping the fire department — particularly with the creation of the Financial Stability Board to build more resilient financial institutions, address ‘too big to fail’, and build a framework for robust market-based finance. 
The G20 also shifted its attention to: supporting fiscal consolidation to reduce ballooning debt across key countries; encouraging the structural reforms necessary for growth; and interrogating current account deficits for signs of risk.
Most importantly, recent research strongly suggests the G20 was responsible for a significant part of these outcomes, and that it was a result of genuine coordination, rather than mere coincidence.
According to policymakers there at the time, it was because of the G20 that eleven of the G20 economies undertook more fiscal stimulus from 2008 to 2010 than they otherwise would have.
Further, the G20 provided collective support to countries to refrain from competitive exchange rate devaluations, and from introducing trade protection during the crisis, as well as defusing tensions around monetary policy spillovers.
The G20 influences the thinking of central bankers and, through this, their policies.
Some countries did more to reduce their debt and deficits because of the G20.
Some implemented new, or more ambitious structural reforms because of the G20.
And some altered their policies to reduce their contribution to global current account imbalances.
In my view, the G20’s most critical role is as a global fire department ¾ on call and ready if needed.
Of course, fire departments are of most use when there is a fire. But they need to keep their equipment in functional order – or, for the G20, maintain relationships and the functioning of the organisation – to be ready when the next fire lights up.
Much of the criticism levelled at the G20 is that it lost its way as a leaders’ forum after the GFC.
With the burning platform extinguished, did mission creep rise from the ashes?
I suspect many of you here today hold that view.
Yes, the initial impetus for cooperation passed ¾ and thankfully so.
Progress: steady steps
We cannot now hold the G20 to that same standard of crisis cooperation that was forthcoming at the time of the GFC.
Naturally and appropriately, the G20’s focus has shifted from crisis response to dealing with longer‑term, structural issues: global governance reform, sustainable growth and structural reform.
Some G20 achievements, like tripling the IMF’s lending capacity and providing a common framework for the world’s development banks to increase private investment, struggle to find room in academic publications, let alone the popular press.
The G20 has pushed for, and achieved, progress on a range of issues that have been advanced even further below the radar ¾ you won’t have seen them in the headlines, but they will make a material difference to the wellbeing of people around the world.
Long-running efforts to reduce the cost of remittances to developing countries are beginning to bear fruit.
Since the G20 first committed to reduce remittance transfer costs in 2011, they have fallen from 9.3 per cent in mid‑2011 to 6.9 per cent in the third quarter of 2018.
For a Pacific seasonal worker in Australia, this represents an average saving of AU$9 on an AU$200 transfer.
And for scale, according to World Bank estimates, around USD$110 million in remittances were transferred from Australia to Pacific Island Countries in 2017, up from USD$102 million in 2010.
Or, to give an example from the Finance track of the G20, is the work on digital taxation.
The spillovers associated with tax policy in individual countries make this topic ideally suited to the G20.
The debate over taxation of digital platforms, particularly as it relates to the location of ‘value capture’, is increasingly important given the size of multinational digital companies (Google, Facebook etc.).
To give a third example, Germany added global health to the G20 agenda last year, focused on addressing market failures in research and development and improving co-ordination to prevent the further spread of anti‑microbial resistance, or AMR.
Increasing resistance to antibiotics and a lack of new drugs means greater risk of infections that cannot be treated, with a growing and potentially enormous cost to the global economy.
Chancellor Merkel injected momentum on this issue in Hamburg, with leaders committing to tackle the spread of AMR in humans, animals and the environment.
We have also fallen short on some goals.
Perhaps the most notable is the commitment G20 countries made in 2014 to undertake sufficient structural reforms to raise the G20’s collective GDP by 2 per cent by 2018 above the IMF projected baseline in October 2013 – otherwise known as the ‘2-in-5’ commitment.
We have reached 2018 now, and it is clear we will fall short.
Indeed, because of the more-sluggish-than-expected recovery from the GFC, the IMF now forecasts 2018 G20 GDP to be around 2 percent lower than the October 2013 forecast, rather than 2 percent higher.
Nevertheless, the effort wasn’t in vain — the IMF assesses that the reforms boosted 2018 GDP by about 1.2 per cent above the level had there been no reform. Further, countries learnt from each other’s experiences in implementing structural reforms.
According to Triggs’ research at Brookings, Russian officials reported that they developed domestic policies to boost female workforce participation because of the G20.
South African officials said they implemented reforms more rapidly and pushed for more ambitious reforms because of the G20.
Ambassador Joe Hockey reports that the United States is considering an Australian-style asset-recycling initiative which it learned about during the G20.
Having said that, the ‘2 in 5’ commitment provided a lesson for us in matching ambition to political will.
We are faring much better with the other ambitious goal set during Australia’s presidency, to reduce the gender gap in workforce participation by 25 per cent by 2025.
Modelling by the OECD at the time suggested that achieving this commitment would raise G20 GDP by between 1.2 and 1.6 per cent, implying that much of the ‘2 in 5’ commitment would have been met through this policy initiative alone.
Australia itself is eighty per cent of the way to meeting our target.
Beyond that, the goal continues to frame policy commitments and contributes to new policy developments both here and around the world, including in Russia, Japan and Saudi Arabia.
Prospects: the challenge at ten
So I am an optimist about the future of the G20. Its achievements often do not get much airplay, but they are still meaningful.
And the G20 has avoided much of the bureaucracy besetting other international fora.
There is no standing secretariat.
Coordination is provided by a ‘troika’ made up of the past and future G20 presidencies, with the current presidency as Chair.
Much analytical support is provided by existing international organisations, such as the IMF, World Bank, OECD, WTO, etc.
Most importantly, we have an appropriate membership.
Argentina’s focus this year on the future of work has brought this conversation to the fore.
Amid the diverse membership, countries have reacted in different ways to this theme.
Some have focused on worker dislocation and changes to income distribution from technological disruption.
Others have focused on the benefit of technological change, particularly higher national income.
Emerging countries are particularly interested in whether robots and artificial intelligence will make the traditional path to development more difficult, with less workers needed in the industrialisation phase.
There are a number of reasons why technological disruption fits the G20’s mandate.
Technology crosses borders whether governments like it or not.
How we manage that process matters for global income growth and distribution.
It is also important for maintaining domestic support for globalisation.
Advanced countries want a return on investments they have made in developing new technology, while workers everywhere want more secure employment and incomes.
New technologies can change a country’s terms of trade – the gains to Australia in the mining boom came from both higher commodity prices, and lower prices on Chinese imports as they rapidly advanced towards the manufacturing technological frontier.
Other countries without our comparative advantage were not so fortunate.
Many of these economic trends may have only just started and underlie some of today’s geopolitical tensions.
The G20 can promote some solutions, such as improving education and skills, and updating international trade agreements for the rules needed for the new economy.
But the main benefit from the G20 undoubtedly is as a forum to air views and share experiences.
In the G20, Australia has a reputation as a straight talker with a keen interest in maintaining the effectiveness of the G20.
We support efforts — and have led some — that seek to focus the G20 on a tighter agenda supporting improved international economic cooperation.
We also favour spending more time on big issues and direction-setting discussions rather than bureaucratic statements of intent.
So I remain an optimist.
The G20 is but ten years young and we still have the opportunity to make of it what we want and need.
More immediately, what are the prospects for the Buenos Aires Summit?
Argentina’s focus on the future of work will resonate with leaders and remains salient regardless of other developments.
The real challenge will be in delivering an agreed communique while tensions remain on trade, climate change and the 2030 Agenda for Sustainable Development.
The outcome of the Charlevoix G7 meeting earlier this year was not a good omen.
We no longer live in a world where all the major countries accept key multilateral agreements and institutions — the Paris Agreement, the Sustainable Development Goals, and the WTO.
We have taken broad support for these institutions and mechanisms for granted, and a loss of that support is confronting.
Australia’s prosperity has been built on access to an open, rules-based global economy. That is a proposition with broad bipartisan support; not something you could say about many countries at present.
We have 27 years of uninterrupted growth to prove it.
The G20 represents the pinnacle of that global rules-based system, cemented in the firm foundation of each country’s enlightened self-interest, where countries achieve more for themselves by working together.
We would be delighted to see countries returning to the WTO to resolve their disputes and forestall more unilateral trade actions.
And like many others, we strongly support reforms to the WTO that make it more effective.
Having said that, if there is a profound economic or strategic disagreement between two major countries – for example on trade – the G20 as an institution does not have the authority to resolve that disagreement. The G20 provides a forum for sherpas, and subsequently leaders, to discuss the details and context of the disagreement. Discussions can involve the two countries in question, and also other members of the G20, in whatever combinations leaders choose. That is a worthwhile contribution even if, at the end of the day, the G20 cannot resolve the disagreement.
There is no G20 campfire to help leaders see their existing policy choices in a new light.
But there is a table around which G20 leaders can explain how they see the world.
And there are plenty of corridors in which Leaders can have frank discussions.
Even if there were no final communique, fora like the APEC, East Asia Summit and G20 provide opportunities for leaders to meet outside of the bilateral state visits, and to talk to each other away from the megaphone.
Perhaps most in this room would agree that this is needed now more than at any time since the G20 was founded.
 IMF 2017 WEO Chapter 2 https://www.imf.org/en/Publications/WEO/Issues/2018/09/24/world-economic-outlook-october-2018
 World Trade Report 2015 – Speeding up trade: benefits and challenges of implementing the WTO TFA (https://www.wto.org/english/res_e/publications_e/wtr15_e.htm)
 Maddison Database 2010
 IMF World Economic Outlook (April 2018), GDP based on PPP, share of world; and Australian Treasury long‑term projections
 World Population Prospects: 2017 Revision (UN Population Division)
 IMF WEO April 2008 and April 2009, world GDP, constant prices, annual percent change
 G20 communique
 China’s stimulus largely involved increased spending through policy banks, rather than traditional fiscal policy (Pei, 2012). They also avoided competitive devaluation by maintaining a fixed exchange rate.
 In response ¾ and in support of Australia’s AMR Strategy 2015-19 ¾ PM&C’s Behavioural Economics Team of Australia (BETA), working with the Department of Health, conducted a trial aimed at reducing the number of antibiotics prescribed by high-prescribing Australian GPs. Sending GPs a behaviorally-informed letter, telling them how their prescribing rate compared to other GPs, reduced their antibiotic prescriptions by 12 percent.
 IMF October 2013 WEO and October 2018 WEO.