Treasurer Joe Hockey has used a speech to lay out this weekend’s G20 agenda as the IMF urged coordinated action on growth.
Federal Treasurer Joe Hockey says the global economic recovery is not yet sufficiently strong to create enough jobs to lift people out of poverty.
But he said this weekend’s Group of 20 meeting of finance ministers and central bankers in Sydney provides an opportunity to improve economic policy making.
His warning came as the International Monetary Fund called for the G20 to boost growth, saying more coordinated work is needed to keep output and demand expanding.
It said advanced economies are still leading a pick-up in economic growth overall, but the world economy is still struggling to leave behind the financial crisis that began in 2008.
Mr Hockey said the global economy was not yet out of the woods and that key risks remain.
“We all know that the path of economic recovery and growth is not always smooth,” Mr Hockey told the Institute of International Finance conference in Sydney on Thursday.
“That is why, as political leaders, we must frame the economic challenge in terms that the community understands and ultimately accepts.”
The G20 must continue to work together through “macroeconomic coordination”.
This was a better way to share information between nations, utilise policy tools to reach a shared objective and be collectively prepared to respond to a crisis.
But Tim Harcourt, a fellow at University of NSW’s Australian School of Business, argues that trade should be at the heart of the G20 deliberations in a push for global growth.
“If we don’t, we risk trade blocs and a spaghetti bowl of overlapping discriminatory agreements,” he said.
Mr Hockey said the G20 meeting, the first under Australia’s 2014 presidency, had a weighty agenda but it must respond and act.
“There is no finishing line when it comes to economic reform. It is an Olympic relay race with an unlimited number of runners,” he said.
Financial regulation and international taxation are two key items on the agenda.
Mr Hockey said it was time to move from “crisis response” to a more stable regulatory framework.
“More regulation should be cast aside in favour of better regulation,” he said.
He also said the international tax framework had not kept pace with business operations which has resulted in an erosion of tax bases.
“We need to make sure there are no gaps between our tax systems and we need to make sure we exchange tax information as a matter of course,” the treasurer said.
Mr Hockey has also been seeking a greater emphasis on building new infrastructure in the push for growth and jobs.
Professor Quentin Grafton, from the Australian National University’s Crawford School of Public Policy, said an infrastructure approach might be helpful in some G20 countries.
“But each country is very different, and it could easily become a device that ends up wasting money that could be better spent in other areas,” he said.
“There is no one size fits all.”