Solving Australia’s foreign affairs challenges

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This article is featured in Australian Foreign Affairs 9: Spy vs Spy. To read the full issue, log in, subscribe or buy the issue.

Susan Harris Rimmer on how Australia can shape the G20 agenda

“Australia has made an impact on the G20 recently, showing that our leadership is welcomed … It could do more with the right support.”

THE PROBLEM: The Group of Twenty (G20) is an association of twenty advanced economies whose purpose is to promote “strong, sustainable, balanced and inclusive growth”. It has been meeting at the ministerial level since 1999 and the leader level since 2008. Australia is a member, along with other major economies such as China, Germany, India, Indonesia, Japan, the United Kingdom, the United States and the European Union.

The G20 is increasingly important to the management of the global economy. It played a major role in bringing back financial stability during the 2007–08 global financial crisis (GFC), including committing to a US$5 trillion stimulus in April 2009. Research by Brookings has shown that the impact of fiscal stimulus can double when it is coordinated across the G20. One of Australia’s previous sherpas, or personal representatives of the government, David Gruen, has said the measures the G20 implemented during the GFC directly and indirectly affected Australian lives.

Between crises, the G20 has tried to encourage cooperation between the established powers of the G7 and the emerging powers of China, India and others, especially through measures to combat protectionism. This has been crucial to Australia’s interests as an open economy. Right now, the G20 needs to step up again. COVID-19 is a health crisis that is also an exogenous shock to the global economy, hitting supply and demand simultaneously. The G20 leaders met virtually in March and pledged to inject US$5 trillion in fiscal spending into the global economy and to “do whatever it takes to overcome the pandemic”. They will need to build confidence that the crisis is being effectively tackled inside and across borders or the economic uncertainty will increase.

There are a range of policy areas in which Australia, through its membership of the G20, could play a more active role. These include the economic impacts of disasters such as bushfires and pandemics, the future of the digital economy, the importance of rule-based trade, and investment in regional infrastructure. But Australia is not doing enough to use its G20 membership to try to influence the international agenda.

Part of the problem is that there is little public engagement or scrutiny, as it is not easy for Australians to follow the G20’s activities. Member states, including Australia, have deliberately not set up a secretariat or administrative support unit, hoping to maintain more flexibility. When Australia hosted the G20 in Brisbane in 2014, there was an associated website with resources, now archived. From 2012 to 2016 the government invested in a G20 Studies Centre at the Lowy Institute, which provided pivotal analysis; its website is also now archived. The G20 page on the Department of Foreign Affairs and Trade website sends readers to a Canadian university resource hub. The only other source of public information is the Twitter account, which chronicles the activities of Australia’s current sherpa, Simon Duggan. Clearly, Australia’s inertia on providing information about the G20 is hindering both transparency and our incentive to influence.

THE PROPOSAL: Australia should create a G20 institute to develop policy and maximise our influence. This institute could sit within a government ministry or at a university or think tank, or be established as an independent entity, like the Global Infrastructure Hub, set up by the G20 in Sydney to support policymaking for global infrastructure projects. The institute would mix retired Australian officials with deep knowledge of G20 processes, such as former G20 sherpa Gordon de Brouwer and former G20 finance deputy Mike Callaghan, with government, academic, business and community stakeholders. It could produce timely research as well as inclusive events.

The G20 institute’s mission would be to:

  • allow public access to information about what Australia is doing at the G20
  • drive global economic policy change
  • secure Australia’s key objectives from each summit
  • help facilitate deeper economic engagement with the Asia-Pacific, particularly with fellow G20 members China, Japan, South Korea, Indonesia and India.

Before each G20 summit, the institute would analyse the Australian government’s policy objectives. After each summit, it would assess implementation of these objectives, and the potential for action in other forums, such as the Asia-Pacific Economic Cooperation (APEC), the Association of Southeast Asian Nations (ASEAN) and the United Nations. It would also encourage critical conversations about how the G20 can best function.

The institute would foster international collaboration and actively promote and communicate the results of this work. It would do so widely, including to policymakers and academics as well as to the business and non-governmental sectors. This could involve publishing policy papers, hosting conferences, establishing a student ambassador program, encouraging academic and student exchanges and engaging in community outreach.

Finally, the institute would be a G20 resource centre, collecting and providing access to papers, documents, statements and other materials created to pursue the G20’s global mission. It would support the activities and meetings of the growing list of stakeholder groups, such as the B20, which represents business leaders from the G20 members; the L20, which represents the global trade union movement; the W20, which represents women’s organisations and female entrepreneurs; and the Young Entrepreneurs’ Alliance.

Former federal treasurer Wayne Swan created the G20 Studies Centre at the Lowy Institute with a A$4 million grant from Treasury. Today, the need for such an institute is growing as the G20’s agenda is becoming more complex. Many expect that it will respond to shortcomings in the US- and European-dominated Bretton Woods system (the International Monetary Fund, the World Bank and the World Trade Organization), and the participation of stakeholder groups is adding a new dimension to its engagement with civil society.

WHY IT WILL WORK: The G20 should not be a focus of government investment only when Australia is the host. It is not a sporting event or other tourism driver.

The forum is important to Australia’s national interest, and our membership is not guaranteed, as there is no formal qualification process. The Department of Foreign Affairs and Trade notes that “Australia benefits from G20 cooperation to support an open global economy and to protect the global financial system’s stability”. Australia needs to ensure that future G20 summits keep faith with the government’s foreign and international economic policy positions.

The G20 has driven reforms to the international tax system to stop corporate tax evasion, through the OECD G20 Base Erosion and Profit Shifting Project and the promotion of tax transparency standards. Australia has implemented these reforms with domestic legislation. The G20 has also committed to reduce the gap between male and female workforce participation by 25 per cent by 2025, which would add more than 100 million women to the global labour force. This goal was translated to the Australian strategy “Towards 2025”, which aims for more affordable, accessible and flexible childcare, and greater support for female entrepreneurs.

Australia has made an impact on the G20 recently, showing that our leadership is welcomed. In June 2019, Prime Minister Scott Morrison brokered a declaration at the G20 summit in Osaka, Japan, to put new pressure on Facebook and other social media giants to halt the spread of violent terrorism online in the wake of the Christchurch attacks. Morrison was one of nine leaders who scored an invite to the Outreach Session in the lead-up to the G7 Summit in France in August 2019. At the meeting, Australia worked with the OECD to fund the development of voluntary reporting protocols for social media companies to prevent, detect and remove terrorist and violent extremist content. It could do more with the right support.

When then foreign minister Julie Bishop commissioned the 2017 Foreign Policy White Paper in December 2016, she noted it was designed to help Australian diplomacy be more proactive. She said the aim was to ensure “that we’re not reacting to events, we’re strategically positioned to manage, maybe even shape, events”. In order to shape the G20, Australia needs to do more than just turn up. It needs to leverage its membership, so it can play an active role in promoting international cooperation and steering the global economy.

THE RESPONSE: DFAT would not say whether the government supported the creation of a permanent G20 institute. However, a spokesperson for the department said Australia “supports a strong and effective G20 as the premier forum for international economic cooperation”. “This cooperation is particularly important now as the world faces unprecedented economic, health and social challenges,” the spokesperson said. “Australia will continue to leverage the G20 to proactively advocate for our interests and protect the foundations of economic success, open markets and the rules-based trading system.”

Dedicated to the memory of Russell Trood

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This is “The Fix” from Australian Foreign Affairs 9: Spy vs Spy. To read the full issue, log in, subscribe or buy the issue.