By Michael Fullilove, Executive Director of the Lowy Institute, and Tristram Sainsbury, Research Fellow in the Lowy Institute's G20 Studies Centre.
The Brisbane G20 Summit this weekend will see two dozen world leaders gather in Australia – the most powerful assembly of foreign leaders in our history – along with nearly 8000 delegates and journalists from all over the globe.
The summit comes at a difficult time. World economic performance continues to disappoint. Six years on from the financial crisis, the world's largest economies are experiencing persistently sluggish and uneven growth and face a daunting series of challenges. Meanwhile, relations between some key G20 leaders are tense as a result of several international crises, most notably the conflict in eastern Ukraine – issues that will undoubtedly affect the tone of the discussions in Brisbane.
Australia's G20 presidency coincides with a transitional time for the G20 itself. The world's premier economic forum is redefining itself away from crisis management and towards a longer term 'peace time' role. But it is facing rising criticism that it is merely another talkfest. This summit needs to move the dial.
So far the Australian presidency has been noteworthy in both content and process.
The world needs to be set on a path of higher growth, managed in a fiscally responsible way. This year the Australian presidency has been at the forefront of the commitment to raise G20 growth by 2% over five years. Reaching this target will be hard. It will require difficult decisions on structural reforms. However, countries have already responded with more than 1000 measures, and the Secretary-General of the OECD has reportedly said that the 2% target can be achieved through these measures. The next challenge will be to ensure that commitments translate into actions that are actually implemented.
More robust growth needs to be underpinned by greater investment. The OECD has said that $70 trillion of investment is needed by 2030 to address the growing infrastructure financing gap. Boosting quality investment in new and productive assets is a challenge for all countries, and there are no easy answers.
Making better use of the balance sheets of existing international organisations is one part of the answer. There can also be a role for additional sources of public sector financing, such as the Asian Infrastructure Investment Bank recently established by China. Such international institutions can make a substantial contribution so long as they are transparent, inclusive, clean and aimed primarily at increasing infrastructure investment rather than exercising foreign policy influence.
G20 countries are also rightly emphasising the need to improve the investment climate and move towards growth led by the private sector. More detail on concrete actions to boost investment, including through the creation of a global infrastructure hub, should be forthcoming from G20 leaders this week.
Under Australia's stewardship, a tight and focused agenda on economic fundamentals has seen important progress made on financial regulatory reforms and in modernising the international tax system. These initiatives will help build economic resilience and safeguard the global economy and national budgets from future shocks.
Just as Australia has done well on the UN Security Council, we have made good use so far of our G20 presidential year. Both cases provide a rejoinder to those who argue that as Australians we should know our place and keep our heads down, focused on the immediate neighbourhood.
The UN and the G20 play a critical role in resolving global issues that shape Australia's security and prosperity. A 'larger' Australia should never be shy about seeking a more prominent role in the world.
Photo by Flickr user John.