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Thursday 17 Aug 2017 | 01:47 | SYDNEY
Thursday 17 Aug 2017 | 01:47 | SYDNEY
Debates

Australia's approach to global economic governance

29 Jul 2016 16:03

The G20 is a policy no-brainer for Australia, and we should be actively engaged in the forum. 

This is one of the basic conclusions that my colleague Hannah Wurf and I outline in our Lowy Institute analysis, Making the most of the G20, released today. 

The position may surprise those that have bought into the sheer cynicism embodied in Gordon Brown’s recent remarks that the G20 is widely viewed as ineffective. There’s been a noticeable downgrading of Australian government attention on the G20 (particularly in the treasury) since the end of 2014.

To be clear, the G20 may be a flawed forum (a viewpoint that is justified by a lacklustre meeting among finance ministers last week in Chengdu) but it is certainly valuable.  At a time when multilateralism is in decline and countries are turning inwards, it is needed. 

COMMENTS

1 Aug 2016 08:59

The Lowy Institute analysis 'Making the Most of the G20', which argues the G20 should be at the centre of Australia's approach to economic engagement,  explores many of the themes that will be aired in this debate.

As a small open economy in an increasingly interconnected global economy, Australia has a direct interest in the global policy agenda. In the narrowest sense, we need to be engaged in the international policy discourse because we are directly affected by the decisions that are made. Given that Australia has little choice but to abide by the rules and conventions that are agreed in international forums, it is clearly in our interest to be sitting at the table when those rules and conventions are being formulated.

Beyond pure self-interest, international engagement is an inherently and, arguably, increasingly worthwhile objective. International engagement can improve policy formulation in response to both global crises — for example, the coordinated G20 policy response to the global financial crisis — and common structural challenges, such as population ageing, structural reform, climate change and economic inequality.

COMMENTS

2 Aug 2016 14:30

The Lowy Institute analysis 'Making the Most of the G20', which argues the G20 should be at the centre of Australia's approach to economic engagement, explores many of the themes that will be aired in this debate.

Australia's enviable economic performance over the last quarter-century has given us something more than boasting rights in international fora. It has delivered comparatively strong improvements in real incomes and asset prices for middle Australia at the same time that the middle class in America and Europe has withstood stagnant real wages, falling asset values and a withering attack on traditional jobs as a result of the 'fourth industrial revolution'.

This improvement in Australians' standard of living was driven by a range of domestic policy decisions taken by successive governments. Moreover, the protection of our economic diversity served us well as everything from the internet to commodity prices endured boom and bust conditions.

As a medium-sized, open economy however, Australia's economic growth prospects will always be most significantly influenced by external developments. Our flexible currency, manageable external debt and robust financial system have helped us to withstand external shocks.

COMMENTS

3 Aug 2016 12:13

The Lowy Institute analysis 'Making the Most of the G20', which argues the G20 should be at the centre of Australia's approach to economic engagement, explores many of the themes that will be aired in this debate.

It was inevitable that maintaining relevance would become more difficult over time; nevertheless, two years on from Australia’s hosting of the 2014 Brisbane G20 summit, the G20 has largely descended into a talk-fest to which very few are listening. In 2014, Australia contributed to this erosion of authority by its embarrassing refusal to countenance a substantive debate about climate change and to champion an agenda to combat growing wealth and income inequality.

Both in 2014 and since, no political leader or nation has seized the bully pulpit and spoken clearly and persuasively about the growth challenges in the global economy. It’s been left to IMF Managing Director Christine Lagarde and central bank governors like Mark Carney to champion inclusive growth.

COMMENTS

4 Aug 2016 12:08

The Lowy Institute analysis 'Making the Most of the G20', which argues the G20 should be at the centre of Australia's approach to economic engagement, explores many of the themes that will be aired in this debate.

Sitting alongside some of our key economic partners at the G20 finance ministers and central bank governors meetings, and IMF and World Bank Spring meetings, I was reminded how Australia’s place in the world economy is truly remarkable. We have a relatively small population (53rd in the world, ranking us somewhere between Madagascar and Cameroon), we are one of the world’s most geographically isolated countries, and yet we have the 13th largest economy and play a critical role in the global economic architecture. The Australian footprint is strong, with investments around the world worth around $2 trillion. Foreign investment in Australia is at a record high of $3 trillion. 

Despite being relatively small and remote, we are leaders and partners alongside the world’s largest economies. In global forums, where the challenges of an unsettled present and an uncertain future loom large, we have a seat at the table and a voice in the conversation, not only because of the size of our economy but also because of our strong economic policy record. 

COMMENTS

5 Aug 2016 11:50

The Lowy Institute analysis 'Making the Most of the G20', which argues the G20 should be at the centre of Australia's approach to economic engagement, explores many of the themes that will be aired in this debate.

Australia has a choice. It can actively seek to influence international economic events, or it can play a passive role. 

As an open economy dependent on access to international markets, the first option seems the obvious answer. But it involves more than promoting exports and investment. It means Australia throwing itself into international economic engagement in an effort to influence the policy decisions of other countries and the performance of international bodies with the aim of promoting a stable, open and growing global economy. Easier said than done, particularly when there is little immediate domestic political payoff for governments engaging on international issues. 

COMMENTS

19 Aug 2016 10:09

Part 1 of this post examined the basic business case for Australia's involvement with the G20. This post examines the other, less appreciated strength of the forum: how it complements most other key planks of our economic diplomacy strategy. The key question therefore is not one of choosing how to 'balance' our G20 efforts with other approaches, but, rather, how to build a coherent strategy that secures Australia's interest through the totality of our relationships.

The G20 includes all our key bilateral economic partners and provides unrivaled opportunities to strengthen these relationships through regular contact and cooperation. Certainly the side meetings around the G20 are important opportunities to progress bilateral issues.

But international relationships are a bit like interpersonal ones: they gain strength from participating in common activities. Hence, our relationship with key countries have been deepened by our work with them in the G20 – negotiating common positions on G20 issues, caucusing, and ensuring Asia Pacific and other common interests are protected.

COMMENTS

26 Aug 2016 11:25

Most participants in this Interpreter debate on the G20 agree the forum needs more committed political leadership and a doubling of existing efforts. 

But what if strategically minded political leaders aren’t convinced the G20’s agenda enhances their domestic standing? If leaders are expected to take time out of their busy schedules for annual discussions that they do not find to be especially pressing or productive, might they not be tempted to de-prioritise the G20? 

For example, recent political events in G20 member states like the United Kingdom (Brexit), the United States (Trump), Turkey (an attempted coup), alongside impending elections in France and Germany, have all been tainted by growing concerns about migration. Migration may be a geopolitical issue that lies outside the G20’s traditional agenda, but many of those fortunate enough not to live in G20-land may find it curious that world leaders could attend such a high-powered meeting and leave substantive discussion about migration (forced or otherwise) off the formal agenda. 

COMMENTS