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Fragile world economy means G20 can’t be just a talkfest

August 21, 2014 Statistics & Trends No Comments Email Email

The Brisbane G20 Summit must deliver a plan for real action on key economic issues such as taxation and financial sector reform to ensure a crack-down on profit shifting by multinationals and to reduce the risk of another Global Financial Crisis (GFC), according to CEDA’s report being released today.
CEDA Chief Executive Professor the Hon. Stephen Martin said the report, Australia’s Brisbane Summit challenge: Securing G20’s future, examines the relevance of the G20, whether it still has a role to play and if so, how further potential can be realised.

“Our report has found that, despite suggestions to the contrary, the G20 absolutely still has a role to play in tackling major economic challenges,” Martin said.

“However, the CEDA report also highlights it is vital that issues such as financial system regulation and taxation reform – where substantial progress through the G20 has been achieved already – must be addressed with renewed rigour following the Brisbane Summit,” he said.

“For example financial system regulation reforms pursued by the G20 following the GFC have been strong but they were largely, as to be expected, reactionary. The next step in these reforms is to address the root cause of financial crises, and to put policies in place to deal with them.

“The tax reform agenda also needs to be expanded to become bolder with a clear emphasis on tackling tax avoidance through policies that stop profit shifting, increasing transparency, and by being applied more comprehensively to emerging economies.

“While issues such as Russia’s participation in the Summit are critical, it is important that the focus on key economic reforms is not overshadowed or lost.”

Professor Martin emphasised that the world economy is still fragile, particularly with respect to global finance, and the focus for the Summit agenda therefore must concentrate on what policy decisions and actions need to be considered to mitigate against another potential GFC.

“The impact of the GFC is still being felt in the world economy and while Australia was insulated from its worst effects by the mining boom, it is unlikely we would have the same buffer if another occurred,” he said.

Professor Martin said it was very disappointing that other key issues such as climate change, particularly the economic consequences as identified in a previous CEDA report and by world leaders, are currently not on the agenda.

“As the host of the G20 Brisbane Summit, Australia has a unique opportunity, in fact a duty, to make sure that the forum is more than a ‘talkfest’, and that key issues with significance for both our own economy and globally are tackled effectively,” he said.

“Australia is spending a significant amount, suggested as being almost half a billion dollars, as host of the G20 this year.

“However, if the reforms proposed through a robust agenda are enacted, there is potential for a much larger economic payoff, many times this amount for the global economy which will of course flow through to Australia.

“The central issue is making sure this potential is realised.”

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