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The G20 Summit – The Brisbane Action Plan

As world leaders departed Brisbane on Sunday, the headlines mostly centered on the “Brisbane Action Plan” (and of course President Vladimir Putin’s decision to leave early to get some sleep), the plan’s aim was to use co-ordinated policy approaches across the 20 nations in order to achieve the following key objectives:

  • Lift global GDP and create jobs
  • Boost trade and promote competition
  • Increase investment in infrastructure
  • Build a stronger and more resilient financial system
  • Fight corruption and tax avoidance

In addition steps were also announced to combat Ebola and address climate change – much to the chagrin of summit host Tony Abbott who had argued that “coal is good for humanity” and “what might happen in 16 years’ time” wasn’t a significant issue for the G20 group.

The big one: raising global GDP

The G20 leaders pledged 800 separate measures to raise their countries’ collective GDP by 2.1% above the forecasts given in the October IMF outlook up to 2018. If achieved this would add over two trillion dollars to the global economy and have a significant impact on employment by creating millions of new jobs.

Macroeconomic co-operation, through monetary policy normalization, greater exchange rate flexibility, and an edict maintain a medium term outlook and to refrain from “competitive devaluation” are all touted as potential ways to return confidence and grow the global economy.

Another big commitment is to increasing investment for both infrastructure and small and medium enterprises (SMEs) in order to boost member countries’ economies:

“We welcome the launch of major investment initiatives in Argentina, Australia, Brazil, India, Korea, Mexico, Saudi Arabia, the United States and action in other G20 members included in their growth strategies. Additionally, the European Union in October announced a major initiative mobilising additional public and private investment over 2015-17.”

On employment, an interesting proposal takes the shape of reducing the gap between male and female participation rates in employment by 25%, although light on details of how this would be achieved it would add an extra 100 million women to the labor force within the G20. Furthermore the group proposed to fight youth unemployment by ensuring access to quality education, training and skills development.

The Global Infrastructure Initiative

The G20 highlighted the importance of infrastructure investment’s crucial role in increasing demand, productivity, and growth. The Global Infrastructure Initiative (GII) is a multiyear initiative to promote both public and private investment in infrastructure and SMEs through improved “financing environments” (such as tax incentives for investment) and direct funding.

A critical part of this plan is the creation of a Global Infrastructure Hub based in Sydney with a four year mandate to provide dedicated resources to help implement the following GII objectives:

  • Build an infrastructure knowledge sharing network to assist the flow of information on infrastructure projects, financing, and best practice between governments, the private sector, and national and international organizations and institutions.
  • Remove key data gaps in investor knowledge that might hinder investment.
  • Create a consolidated infrastructure projects database to better link investors to projects.

Crucially the Hub will be an open platform open to G20 and non-G20 countries alike. The hope is that the increase level of openness and co-operation will foster an environment that leads to greater levels of infrastructure investment without the need for huge levels of public funding, which in turn will aid the economic growth of both G20 and non-G20 countries.

In the end what will it achieve?

Important to remember that summits rarely deliver all they promise and despite the strong rhetoric there are few binding commitments for example: on the main action point of raising GDP, Finance Ministers and central banks will have to report back to on progress and the accountability framework states that:

“It will keep pressure on members throughout the year to implement their policy commitments by undertaking a thorough mutual assessment of the G-20’s progress.”

But with no penalties in place for breaking the agreement and with built in processes to “allow members to consider new commitments and to modify existing ones.” It would be easy for the countries to ignore key parts of their commitments in the coming years.

On climate change, the group’s Energy Efficiency Action Plan states quite clearly that it is voluntary and proposes no numerical targets for cutting energy use, despite opening with the line:

“Energy efficiency is a priority for G20 members. As the world’s leading economies, and consumers of more than 80 per cent of the world’s energy, G20 members agree that increased collaboration on energy efficiency can drive economic activity and productivity, strengthen energy security and improve environmental outcomes. “

Action is limited to “sharing approaches” on business efficiency. The response to the Ebola outbreak doesn’t actually commit any additional funds, the list goes on.

So whilst on first glance the Brisbane Action plan looks to be a considerable step forward for the global economy, it is difficult to see the accord lasting through until 2014 in particular if there are further financial shocks which affect member countries. Perhaps only time will tell.

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