Business leaders urge G-20 reforms to boost global growth by $3.4 trillion

SYDNEY — Business leaders in Australia Friday called on the Group of Twenty (G-20) leading economies to implement recommendations on structural reforms and free trade that could boost global growth by $3.4 trillion and create millions of jobs.

The business chiefs, who were in Sydney for a two-day B20 summit, said their list of 20 recommendations — if adopted by G-20 leaders — would help them exceed the 2 per cent additional gross domestic product (GDP) target over five years that finance ministers agreed to in February.

"What we are recommending is mostly new structural reform measures that would deliver on the G-20 growth target and form a blueprint for sustainable economic growth in the medium-term," B20 Australia chair Richard Goyder said.

"If G-20 countries commit to these reforms, the gains will be large, but a failure by any of the G-20 countries to commit will mean a significant opportunity cost," he added.

The recommendations call for the free flow of goods, services, labour and capital, an effective and transparent regulatory framework, as well as structural reforms that would boost trade and lift infrastructure investment.

Moves towards freer trade could boost global GDP by $3.4 trillion and support more than 50 million jobs across the G-20 nations, which "would be akin to adding another Germany to the global economy", the B20 indicated.

At the same time, increasing investments in infrastructure to fill an estimated gap of between $15-20 trillion by 2030 could unlock $6 trillion in economic activity every year and create up to 100 million jobs, the business leaders pointed out.

Australian Treasurer Joe Hockey welcomed the recommendations, saying they supported the G-20's goal under Australia's presidency this year of driving growth and jobs creation.

"These 20 recommendations fit in nicely with our overarching goal," Hockey said. "The G-20 is very focused on how to drive growth and jobs creation, best utilising all of the resources and skills available in the private sector.”

"In some countries, this is a change of ideology, but necessity has changed attitudes," he added.

The senior leaders of some of the world's most high-profile companies, such as Royal Dutch Shell, General Electric and BHP Billiton, also called on G-20 governments to tackle fraud and bribery through measures such as introducing or strengthening national independent corruption authorities.

"All of our objectives of long-term sustainable and inclusive growth will be undermined if the level of existing global corruption is allowed to continue," said Michael Andrew, chair of the B20's anti-corruption working group.

"It's estimated by the World Bank that corruption constitutes 5 per cent of global GDP. That would make it the third-largest industry in the world," he added.

Infrastructure 

global hub

Hockey said earlier on Friday that he was pushing for a G-20 "infrastructure global hub" to support projects as government coffers dry up.

The treasurer added that the world's economies needed growth that was not stimulated by ultra-easy monetary policies implemented after the global financial crisis.

New ways to drive economic growth included infrastructure projects jointly funded by the public and private sector, he remarked.

"Governments have run out of money to be able to fund the infrastructure needs that the community has," Hockey said. "Therefore we need you, and we need your money, and there is a tremendous amount of liquidity in the world, we recognise that.

Hockey said Australia had "put on the table a proposal... to have an infrastructure global hub not as a funder but as a knowledge bank". 

He noted that the proposal was well-received when it was first raised at the February meeting.

"We were all afraid of learning new lessons — that others have already learnt — at our political cost," he added. "We didn't want to reinvent the wheel, but as we talked in an informal atmosphere, it became clear that everyone had some experience.

"So we want to create a global hub... which will become a repository of all information on infrastructure investment," he said. 

On Thursday, Australian Prime Minister Tony Abbott called for G-20 economies to adopt more ambitious growth targets, urging leaders not to "waste each other's time" with a talk-fest.

Abbott told more than 380 business leaders that the world's economies were still "in the shadow of the [financial] crisis" and "action, not words" was needed to boost growth.

"The G-20 will deliver a three-page communique in plain language because we need to talk not at length about our good intentions, but precisely what we would do to put good intentions into practice," the Australian leader said. "I made a promise at Davos this year. I said that the G-20 had to be so much more than a talk-fest.”

"Otherwise the leaders of the world's largest and most representative economies could be accused of wasting each other's time," he added.

Abbott told media later that Australia was asking G-20 nations to push harder on their growth plans, so they could meet their pledge during a February finance ministers' meeting to add 2 per cent to GDP over the next five years.

"It seems that the measures in each individual country's national plan collectively would add little over 1 per cent to growth over the next five years, and we're going back to each country asking them to be a little bit more ambitious," he said.

Free trade push

The prime minister emphasised the need for freer international trade, saying "no country has ever taxed or subsidised its way to prosperity".

His comments were echoed by Trade Minister Andrew Robb, who said the deal struck by 160 members of the World Trade Organisation (WTO) at a Bali summit in December — which streamlines the global flow of goods — needed to be implemented by all countries.

"The pursuit of ambitious bilateral, regional and plurilateral trade agreements should also be embraced as they are important building blocks in the global trading system," he said in a column for The Australian Financial Review. "As Australia's experience shows, trading, open nations are also prosperous ones."

The WTO said Thursday it was launching a $30 million support programme for developing countries that signed up to the agreement to help them implement the reforms.

WTO Director General Roberto Azevedo said: "The worst case scenario for the multilateral trading system and for global trade is inaction.”

Azevedo added in a speech in Canberra Thursday the deal proved multilateral agreements, while difficult to achieve, were possible and countries should "seize the opportunity that Bali has created".

The push to expand trade was reiterated by the World Food Programme's executive director, Ertharin Cousin, who said businesses should also look to markets in the world's most impoverished nations. 

"Being poor does not mean there is not an opportunity to create markets," said Cousin, who discussed food security issues with business leaders during the summit.

"What we are hopeful of is that [the] private sector will recognise that there is an opportunity for them... to support countries that to date have not had significant private sector investment outside of their local market [and] national companies," she said.

"Where you see companies like Unilever, who have seized the opportunities to go and into places like Rwanda, Kenya and Tanzania and invest in smallholder farms, it is making a difference in their bottom-line," Cousin added.