Good morning ladies and gentlemen, delegates.
Thank you Tim Costello, for that very kind introduction and thank you for the passion and enthusiasm that you show. Tim Costello is a positive force for good in our community here in Australia and globally.
I’m delighted to be here in Melbourne this morning to open the C20 Summit.
This is an exciting year for Australia as we host the G20 and I believe it’s an exciting year for the G20. For our presidency is an opportunity to ensure the G20’s economic reform agenda has global reach and benefits.
It is notable that the G20 nations account for 85 per cent of global GDP, 75 per cent of global trade and two thirds of the global population. But its core objectives – lifting global growth, creating jobs and building resilience following the global financial crisis – are good for all nations.
Economic growth is the most powerful weapon against poverty. That’s why Australia’s new aid policy – that I released in Canberra at the National Press Club on Wednesday – aligns the goal of poverty reduction with regional economic growth. This goal of course is in Australia’s national interest, but it is unambiguously focusing on alleviating regional poverty and promoting prosperity.
Aid can no longer be seen in isolation from economic drivers. Aid now accounts for only a small fraction of resources for development. In 2013, global Overseas Development Assistance was about $135 billion. But remittances were more than $400 billion, private capital flows almost $900 billion and and tax revenues in developing countries were $7.7 trillion.
These facts should challenge the traditional development approach and must be seen as a catalyst for leveraging other sources of finance and opening up the potential of the private sector for it is the private sector that creates jobs and drives economic growth. A large part of our development effort needs to be about providing an environment in which the private sector can thrive.
Australia’s aid program will now respond to this reality and aid will promote economic growth and tackle poverty through a strong emphasis on initiatives including ‘aid for trade’. Aid for trade investments for example will be increased to 20 per cent of the aid budget by 2020.
We also recognise that human development and economic growth are two sides of the same coin. The aid program will continue to invest in education, health, reducing disaster risks, responding to humanitarian crises, better governance and accountability as well as empowering women and girls.
A new performance framework is part of the new aid policy. I will ensure funding is informed by progress against a rigorous set of targets and performance benchmarks. This will guarantee that aid is being delivered through the most effective partners. And we will consult with our NGO partners on implementing our aid policy.
And in what I consider a ground breaking approach we are establishing a Development Innovation Hub within the Department of Foreign Affairs and Trade to attract into that hub the best and most creative thinkers in the area of development but more broadly that we are able to find in Australia and from overseas. These creative people will be tasked with coming up with innovative and creative and original ideas and ways of doing things so we can trial and test and scale up if they prove to be a better way of solving seemingly intractable aid challenges. So the search is now on for the best and brightest and most creative thinkers that we can find.
Our objectives in our new aid policy align with Australia’s priorities for the G20, especially in focusing on economic growth. We’re now into the second half of our 12-month presidency and we are committed to making the Leaders’ Summit in Brisbane in November a success.
Part of that success will be built on engagement with our partners outside government – civil society, business, labour, youth and think tanks. Each brings a unique and valuable perspective to global economic issues. I commend the C20 Summit organisers in bringing together a diverse and engaged group of civil society representatives from around the world.
Over the next two days, you will discuss the four themes of the C20 summit: inclusive growth and employment, infrastructure, climate and sustainability and governance. Let me take this opportunity to outline the Australian Government’s perspectives in relation to the four themes.
First on inclusive growth and employment; the G20 is committed to taking practical steps to lift growth and create jobs. Last February, G20 countries committed to taking new measures, individually and collectively, that will lift GDP across the G20 by more than two per cent over the next five years. To do this G20 countries will need to go beyond previous commitments and address challenges and economic constraints in their economies.
Australia is doing its part to help the G20 meet this ambition – we’re reducing red tape, we’re abolishing taxes, we’re increasing competition, we’re boosting workforce participation and supporting investment in quality infrastructure. All of which help improve productivity which Tim Costello spoke about – it will lift growth and create jobs.
If the G20 is successful in meeting this ambition, we could deliver more than $2 trillion in extra global GDP and that would create millions of new jobs globally. Global trade helps drive economic growth. China is the case study. China’s inclusion in the global trading system has underpinned its spectacular economic rise which has seen hundreds of millions of people lifted out of poverty.
That is why we want G20 countries to implement as soon as possible the WTO Trade Facilitation Agreement that was concluded in Bali in December last year. This agreement has the potential to create US$1 trillion in economic activity and it’s estimated up to 21 million new jobs – 18 million of which will be in developing countries.
G20 employment ministers will meet in September to discuss ways to create better jobs and boost employment. Encouraging female participation in the work-force will be a key element of these discussions and it’s a particular policy passion of mine.
In the Asia-Pacific region alone, it’s estaimated up to US$47 billion is lost per annum because of women’s limited access to employment opportunities. And across the world, the strength and capacity of 865 million women is seriously under-utilised in contributing to economic growth.
The only way to address this issue is through changes in policy and changes in attitude. In terms of policy, things like accessible child care, women-friendly workplaces, tax concessions for businesses that help women return to the workforce, support for part-time employment, enhanced parental leave, and legislation changes in attitude on sexual harassment and domestic violence.
Change has to occur beyond domestic employment policies. For example, the G20 development agenda is promoting the expansion of financial services to a broader range of people, specifically focussing on women. These services, that many take for granted, allow people to save, set up businesses, secure their incomes and manage risks through good and bad times and women need equal access to these services. We know that gender equality and women’s economic engagement helps drive growth and development. Investing in women is not just the right thing to do; it is the smart thing to do.
Secondly, infrastructure; the G20 is focused on creating the climate to attract private sector investment. The OECD has estimated the global infrastructure gap to be about US$70 trillion by 2030, and if steps aren’t taken this gap will continue to grow.
There is a lot of private sector money out there, but we need to get the settings right and this is something governments can do quite usefully.
Individual G20 countries are focused on removing impediments to private sector investment. This may mean less regulation and more predictable policies.
The G20 is also working with international organisations to improve investment climates and leverage private sector involvement. For example, we would like multilateral development banks to use their expertise to help countries create a pipeline of bankable projects.
Identifying bankable projects is an area where Australia’s aid program is helping. For example, Australia is contributing $30 million to the Philippines Public-Private Partnership Centre to help prepare, tender and award 26 PPP infrastructure projects, valued at over $7 billion.
These projects are funding highways and expressways, more than thirteen thousand extra classrooms, an orthopedic hospital, an updated train ticketing system and a new airport passenger terminal.
On climate change; international meetings like the G20 cannot and should not try to cover all subjects and thus illuminate none - trying to be all things for all people. We must keep a strong and focused economic agenda for the G20 otherwise it will lose its focus. And we must prioritise issues where there is consensus within the G20 on taking action. All G20 members agree that the United Nations Framework Convention on Climate Change (UNFCCC) is the right forum, with the right mandate for international climate change negotiations.
In fact, G20 leaders have underlined their support for the UN negotiation process and we’ve done that since 2009. But of course the G20 continues to take practical action to address climate change. For example, by promoting energy efficiency and the phasing out of inefficient fossil fuel subsidies. Energy efficiency is one of the most cost-effective ways to reduce emissions and meet rising demand while supporting growth and development.
Inefficient fossil fuel subsidies continue to distort energy markets and encourage wasteful consumption. The global cost of fossil fuel subsidies expanded to $544 billion in 2012, despite efforts at reform. Eliminating subsidies such as these would reduce global greenhouse gas emissions by 10 per cent or more by 2050 so I think there should be more of a focus at the G20 on this aspect.
On the fourth theme of governance, the G20 is focused on continuing reforms of the financial sector, supporting stronger tax systems and tackling corruption. This year, we want to complete the financial sector regulation process that was started more than five years ago in response to the financial crisis.
We are also working on reforming the International Monetary Fund. We need an IMF that reflects the realities of the changing weight in the global economy. The ongoing resistance by the US Congress to proposed changes to the IMF is disappointing and we will continue to take opportunities to urge the US to implement these reforms as a matter of urgency.
G20 governments are also committed to making our tax systems stronger.
Of course Governments in developed and developing countries rely on taxes to fund the services their communities need. But it is clear that international tax laws have failed to keep pace with changes in the global business environment.
We need to address the gaps that allow some multinational corporations to artificially reduce their tax bills. G20 countries are working with the OECD to establish standards on tax transparency. This will allow governments to adopt policies such as ensuring profits are taxed in the location where the economic activity takes place. Now that’s simple – profits are taxed in the place where the economic activity takes place.
The G20 is also promoting transparency through greater exchange of information between tax administrators in different countries. Developing and low-income countries will face unique challenges in implementing the tax transparency initiatives. And there’s been very close consultation with them as part of this process. These reforms will be most effective if all jurisdictions are involved and benefit from them.
The G20 is also playing an effective role addressing corruption. Corruption costs developing economies around US$1 trillion in lost revenue and that’s annually - a trillion dollars annually- money that could be used to build infrastructure and deliver services. The G20 is developing principles to improve the transparency of information on who owns and controls companies. Adoption of these principles will help strengthen the investment climate and reduce this lost revenue.
Citizens from any country, whether they are from G20 member countries or not, share some fundamental aspirations - a life free of poverty; secure employment; and opportunities for their children for a better future. Achieving sustainable and balanced growth across G20 economies and more broadly is central to giving all people the chance to fulfil their potential.
So in summary, the Australian Government is committed to an ambitious G20 agenda aimed at raising the level of the G20’s collective GDP by more than 2 per cent. The Australian Government is committed to policies that will facilitate balanced development and growth and as our Prime Minister has said, the G20 is ultimately about people it’s not governments.
It is in that context that the C20 has an important role in presenting the voices of the world’s most vulnerable to G20 leaders. And listening to your recommendations will help ensure people across the globe benefit from the G20’s work.
It is a fact that more than half the world’s poor population live in G20 countries. So the G20 is working to benefit people in all developing countries – through more open trade, less regulation, better infrastructure, improved banking regulation and more efficient tax systems. The G20’s development agenda, including its focus on infrastructure, taxation, financial inclusion and remittances will help the poor and the vulnerable and contribute to global growth.
I encourage you to generate practical ideas on these topics over the coming two days. I’m encouraged to hear Tim, that the plan is to have a communique that is under three pages – it must be very fine print! It is your ideas and your contributions that will help ensure G20 leaders take into account the perspectives of those most in need. I look forward to hearing your ideas on how that ‘global birthday cake’ can be divided.
We value your contribution and look forward to receiving the recommendations from the C20 Summit as we prepare for an important the G20 Meeting in Australia, in November. I wish you all the very best.
- Minister's office: (02) 6277 7500
- DFAT Media Liaison: (02) 6261 1555