The G20’s economic leadership deficit


Adam Triggs, Australian National University

Few have heard of the Baltic Dry Index. It measures the demand for bulk shipping carriers, used for international trade. It usually attracts little attention. But nine years ago this index had the undivided attention of the 20 most powerful leaders in the world.

It was when the global financial system was on a precipice. Stock markets were crashing. Credit markets were freezing. Rolling failures across financial institutions were shattering confidence. Unable to wait for monthly trade data, the Baltic Dry Index showed in real-time what many leaders feared: global trade and commerce were grinding to a halt.

Leaders faced the real prospect of another Great Depression. But they were determined not to make the mistakes of the past. They resisted a return to protectionism. They slashed interest rates and buttressed the International Monetary Fund and development banks. Over the next three years, they implemented US$5 trillion of co-ordinated fiscal stimulus, the largest in history.

That leadership is needed again today. The risks leaders face at the latest G20 meeting in Hamburg, Germany, might not be as serious as those the leaders who met in Washington faced back in 2008. But the risks are present, and leaders are disengaging with the G20’s ever-expanding agenda. They are more likely to use the G20 for cheap political point scoring than for advancing co-operation on critical global challenges.

Australia can play a role in helping the G20 to deliver this leadership.

Economic challenges

Protectionist measures are on the rise. Protectionist rhetoric is rising faster. The World Trade Organisation shows that the stock of trade-restrictive measures is growing, up 8.5% in the 12 months to May 2017 alone.

The G20’s growth agenda from 2014 is in tatters. The G20 committed to make G20 GDP 2.1% bigger by 2018. Instead, the International Monetary Fund forecasts it to fall short by almost 6%.

A strong, effective G20 is manifestly in the interests of the global community, but particularly of Australia. Three-quarters of our merchandise trade is with G20 countries. Our banks rely on them for wholesale funding. Our tourism sector relies on them for two-thirds of our tourists. Our universities rely on them for the vast majority of their students.

Critically, the G20 is an opportunity for Australia to have a say in how global governance will be shaped in the years ahead and to be a regional champion for Asia.

Through in-depth interviews with over 40 central bank governors, ministers and officials from G20 countries, my research suggests there are practical things the G20 could do to increase its relevance. Importantly, participants see Australia as a developed economy, closely integrated in Asia and which promotes the values of the open, rules-based international order. This makes Australia well placed to push for pragmatic changes to improve the G20 process, particularly having hosted the 2014 meeting.

My interviewees warned that the G20’s agenda is too heavily dictated by the host country. In 2011, when France hosted the meeting, President Nicolas Sarkozy asked UK Prime Minister David Cameron to produce a report on reforming global governance. This instantly elevated the issue and saw substantial involvement from other leaders. Australia should push for allowing more leaders to champion the issues important to them, rather than leaving it all to the host country.

Participants similarly suggested that the G20’s peer-review process is too weak. This is the process through which countries review and give advice on each other’s policies. It’s critical to the G20’s ability to generate peer pressure, which is how a non-binding forum influences policies.

But participants saw this process as being a “tick and flick” exercise, isolated to junior officials in G20 working groups. Australia should advocate to change this, elevating the peer-review process to the level of ministers, governors and leaders. This will allow the people who have political capital to raise substantive points with one another.

For the G20 to demonstrate global leadership, participants suggest that it needs a genuine agenda for growth, with a stronger focus on making growth more inclusive. The OECD has some suggestions for this, such as investment in infrastructure, education and microeconomic reforms that lift workforce participation and create new opportunities for quality investment. The IMF shows that GDP gains can be 25% larger if structural reforms like this are co-ordinated between countries.

Participants also wanted progress on trade but warned that reaching agreement has been difficult. Recent research suggests the G20 should seek to promote consistency between the plethora of global, regional and bilateral trade agreements and develop a framework for how they can be scaled up into a global, WTO-led agreement.

The research shows that countries benefit most when trade liberalisation happens globally, but the “noodle bowl” of existing trade agreements is a nightmare for exporters to navigate. Australia, as a strong advocate for free trade, is well placed to show leadership on this issue.

Outcomes on trade are also vital for inclusive growth. Research shows that the poor can afford 63% more goods and services because of free trade, more than twice the benefit that flows to the rich.

But talk is cheap. It’s easy to commit to reforms but only half of G20 commitments are being implemented.
Australia should push for a serious accountability framework to monitor implementation and identify the countries that fall short.

The ConversationA weakening of the G20 is a weakening of Australia’s international influence. Few countries have a greater incentive to put solutions on the table.

Adam Triggs, Research fellow, Australian National University

This article was originally published on The Conversation. Read the original article.

Note to Liberals: on the leadership front, best to keep calm and carry on


Chris Wallace, Australian National University

Do politicians read history any more? Liberal MPs who have not read Robert Menzies’ Afternoon Light: some memories of men and events (1967) should get it from the Parliamentary Library and read Menzies’ chapter on “my humiliation of 1941”. He writes:

There was a strong view that, having regard to our precarious parliamentary position, my unpopularity with the leading newspapers was a threat to the survival of the government. It followed that, although they had a warm appreciation of what I had done as prime minister, a change in the leadership was called for.

Menzies resigned, and Country Party leader Artie Fadden succeeded him as prime minister. Five weeks later the government fell: two previously supportive independent MPs switched their allegiance after Menzies was pushed from office. Labor was in power for the next eight years.

Key participants in the current Liberal leadership drama know a similar dynamic is at play. “If Malcolm isn’t PM, Shorten will be,” one says. “If Abbott took over, several people would retire and the government would fall.”

This echoes the Rudd-Gillard-Rudd turnstile, redolent with the same animus. But with fringe right parties feasting on the margins of conservative political discontent in Australia, deeper questions are being asked about whether the Liberal Party itself is at risk.

Menzies famously welded several conservative political entities into a new one, the Liberal Party, in 1945. He then led it to victory at its second general election outing in 1949. Its lineage, Old Testament-style, is this. The Free Trade Party and the Protectionist Party of the early Federation era fused into the Commonwealth Liberal Party, which begat the Nationalist Party of Australia, which begat the United Australia Party which, with Menzies as midwife, begat the Liberal Party of Australia.

Thus party reconfigurations on the conservative side of politics in Australia, while only occurring around the edges post-second world war, were common before it and could be so again. Despite the sulphur and brimstone being whipped up by some commentators, however, this does not seem to be one such moment.

Robert Menzies welded several political entities into a new one, the Liberal Party, in 1945.
https://primeministers.moadoph.gov.au/prime-ministers/robert-menzies

Fringe party flare-ups are common in Australian politics. Since the second world war the Democratic Labour Party (DLP), Liberal Movement, Australian Democrats, the Greens, and Pauline Hanson’s One Nation Party have all influenced the major parties’ room for policy and political manoeuvre. In this context, the latest, Cory Bernardi’s Australian Conservatives, is not unusual.

Nor is having to rely on minor parties or independents to form government unusual. Every federal Liberal government has been a coalition government, in league with the National Party (before the mid-1970s called the Country Party). This is despite Menzies’ private hatred of his coalition partner.

On the rare occasions the Liberal Party has had enough MPs to govern in its own right, it remained in coalition, mindful that forming government in more normal political times is impossible without it.

English academic David Runciman recently observed in the London Review of Books that Britain is now a “40:40:20 nation (where) deal-making is the essence of politics” – the “20” being MPs returned to Westminster from the Scottish National Party, the Liberal Democrats, and the Democratic Unionist Party, among others.

Since governments rarely have a majority in both houses of parliament in Australia, coalition-building and deal-making have always been everyday life in our polity. Minor parties come and go in such equations.

It is ironic that Tony Abbott, singularly incapable of acquiring and practising those skills as prime minister, should so successfully destabilise his successor Malcolm Turnbull who, with the Gonski 2.0 school funding legislation, seems finally to have worked out how to govern.

There is irony, too, in the fact that, as Liberals soul-search about whether to move further to the right, Labor strategists see the Coalition’s vulnerability as not moving quickly enough to the new centre on issues like marriage equality and, especially, the environment.

Affluent, educated, urban Liberal voters’ children are, in increasing numbers, not reproducing their parents’ voting behaviour but rather going Green. Abbott’s drive to double down the Liberals’ alignment with climate denialism could only compound this.

Christopher Pyne is as much a Liberal MP as Tony Abbott, and attempts to portray him as a pinko outlier are a travesty of conservative political history in Australia. Menzies called it the Liberal Party, not the Conservative Party, for a reason: he intended it to be a “broad church” of conservatives and liberals, not least because he understood how difficult it is to win office without bringing the centre along with you.

While mouthing “broad church” rhetoric, John Howard drove liberals out of the Liberal Party, and persecuted those, like Pyne, who survived the scouring. This shrank the liberal ballast protecting the party from an even sharper lurch rightwards.

The ConversationTurnbull isn’t very good. “We limp towards defeat,” one Liberal wanly puts it. But that could be so much better electorally than the alternative. If Abbott again becomes the public face of the Liberals, prepare for it to become a very small party indeed.

Chris Wallace, ARC DECRA Fellow, Australian National University

This article was originally published on The Conversation. Read the original article.

Australian Politics: 24 July 2013


The latest asylum seeker ‘solution’ proposed in Australia continues to gather a lot of attention in Australian politics. The links below are to articles that look at the policy from varying prospectives. The first article is an in-depth look at the situation in Papua New Guinea.

For more visit:
http://www.theglobalmail.org/feature/for-those-whove-come-across-the-seas-a-short-trip-to-png/662/
http://www.theaustralian.com.au/national-affairs/immigration/asylum-seeker-boat-sinks-off-indonesia/story-fn9hm1gu-1226684079708

As the Kevin Rudd experiment continues to be a winner for Labor, the Liberals are beginning to face the leadership change question themselves, with a possible shift from Tony Abbott to Malcolm Turnbull becoming popular among voters.

For more visit:
http://www.dailytelegraph.com.au/newslocal/city-east/voters-turning-to-turnbull-over-abbott-but-liberals-say-theres-no-chance-of-leadership-challenge/story-fngr8h22-1226683907946

Australian Politics: 19 July 2013


Compassion seems to have been lost in the asylum seeker debate in Australia, with the Kevin Rudd led Labor government taking a massive shift to a hardline position in refugee policy. The links below are to articles reporting on the new stance.

For more visit:
http://www.heraldsun.com.au/news/breaking-news/rudd-surprises-with-hardline-boat-plan/story-fni0xqi4-1226682198196
http://www.guardian.co.uk/world/2013/jul/19/christine-milne-day-of-shame



Leadership tensions developing in the Liberal Party perhaps?

Australia: Rudd 2.0 Fighting the Abbottsphere


Kevin Rudd is back and ‘zipping’ about, putting the Abbott and all his men (as well as a few women) to the sword and in the eyes of the electorate (a good percentage of it anyway) there is finally some leadership and fight back in the ALP.

For more visit:
http://www.guardian.co.uk/world/2013/jun/28/kevin-rudd-coalition-greens-policy