C20 Summit keynote address
Good morning ladies and gentlemen, delegates.
Thank you Tim Costello, for that very kind introduction and thankyou for the passion and enthusiasm that you show. Tim Costello is a positiveforce for good in our community here in Australia and globally.
I'm delighted to be here in Melbourne this morning to open the C20Summit. This is an exciting yearfor Australia as we host the G20 and I believe it's an exciting year for theG20. For our presidency is an opportunity to ensure the G20's economic reformagenda has global reach and benefits.
It is notable that theG20 nations account for 85 per cent of global GDP, 75 per cent of global trade and twothirds of the global population. But its core objectives – lifting globalgrowth, creating jobs and building resilience following the global financialcrisis – 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 theNational Press Club on Wednesday – aligns the goal of poverty reduction with regionaleconomic growth. This goal of course is in Australia's national interest, butit is unambiguously focusing on alleviating regional poverty and promotingprosperity.
Aid can no longer be seen in isolation fromeconomic drivers. Aid now accounts for only a small fraction of resources fordevelopment. In 2013, global Overseas DevelopmentAssistance was about $135 billion. But remittances were more than $400 billion,private capital flows almost $900 billion and and tax revenues in developingcountries were $7.7 trillion.
These facts shouldchallenge the traditional development approach and must be seen as a catalyst forleveraging other sources of finance and opening up the potential of the privatesector for it is the private sector that creates jobsand drives economic growth. A large part of our development effort needs to beabout providing an environment in which the private sector can thrive.
Australia's aid programwill now respond to this reality and aid will promote economic growth and tacklepoverty through a strong emphasis on initiatives including 'aid for trade'. Aid for trade investmentsfor example will be increased to 20 per cent of the aid budget by 2020.
We also recognise that human development and economic growth aretwo sides of the same coin. The aid program will continue to invest ineducation, 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 willensure funding is informed by progress against a rigorous set of targets andperformance benchmarks. This will guarantee that aid is being delivered throughthe most effective partners. And we will consult with our NGO partners on implementingour aid policy.
And in what I consider a ground breaking approach we areestablishing a Development Innovation Hub within the Department of ForeignAffairs and Trade to attract into that hub the best and most creative thinkersin the area of development but more broadly that we are able to find inAustralia and from overseas. These creative people will be tasked with comingup with innovative and creative and original ideas and ways of doing things sowe can trial and test and scale up if they prove to be a better way of solvingseemingly intractable aid challenges. So the search is now on for the best andbrightest and most creative thinkers that we can find.
Our objectives in our new aid policy align with Australia'spriorities for the G20, especially in focusing on economic growth. We're nowinto the second half of our 12-month presidency and we are committed to makingthe Leaders' Summit in Brisbane in November a success.
Part of that success will be built on engagement with our partnersoutside government – civil society, business, labour, youth and think tanks.Each brings a unique and valuable perspective to global economic issues. Icommend the C20 Summit organisers in bringing together a diverse and engagedgroup of civil society representatives from around the world.
Over the next two days, you will discuss the four themes of theC20 summit: inclusive growth and employment, infrastructure, climate andsustainability and governance. Let me take this opportunity to outline theAustralian Government's perspectives in relation to the four themes.
First on inclusive growth and employment; the G20 is committed totaking practical steps to lift growth and create jobs. Last February, G20countries committed to taking new measures, individually and collectively, thatwill lift GDP across the G20 by more than two per cent over the next fiveyears. To do this G20 countries will need to go beyond previous commitments andaddress 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 qualityinfrastructure. All of which help improve productivity which Tim Costello spokeabout – it will lift growth and create jobs.
If the G20 is successful in meeting this ambition, we coulddeliver more than $2 trillion in extra global GDP and that would createmillions of new jobs globally. Global trade helps drive economic growth. Chinais the case study. China's inclusion in the global trading system hasunderpinned its spectacular economic rise which has seen hundreds of millionsof people lifted out of poverty.
That is why we want G20 countries to implement as soon as possiblethe WTO Trade Facilitation Agreement that was concluded in Bali in Decemberlast year. This agreement has the potential to create US$1 trillion in economicactivity and it's estimated up to 21 million new jobs – 18 million of whichwill be in developing countries.
G20 employment ministerswill meet in September to discuss ways to create better jobs andboost employment. Encouraging female participation in the work-force will be a keyelement of these discussions and it's a particular policy passion of mine. In the Asia-Pacific region alone, it's estaimated up to US$47billion is lost per annum because of women's limited access to employmentopportunities. And across the world, the strength and capacity of 865 millionwomen is seriously under-utilised in contributing to economic growth.
The only way to address this issue is through changes in policyand changes in attitude. In terms of policy, things like accessible child care,women-friendly workplaces, tax concessions for businesses that help womenreturn to the workforce, support for part-time employment, enhanced parentalleave, and legislation changes in attitude on sexual harassment and domesticviolence.
Change has to occur beyond domestic employment policies. Forexample, the G20 development agenda is promoting the expansion of financialservices to a broader range of people, specifically focussing on women. These services, that many take for granted, allow people to save, set upbusinesses, secure their incomes and manage risks through good and bad timesand women need equal access to these services. We know that gender equality and women'seconomic engagement helps drive growth and development.Investing in women is not just the right thing to do; it is the smart thing todo.
Secondly, infrastructure; the G20 is focused on creating theclimate to attract private sector investment. The OECD has estimated the globalinfrastructure gap to be about US$70 trillion by 2030, and if steps aren'ttaken this gap will continue to grow.There is a lot of private sector money out there, but we need toget the settings right and this is something governments can do quite usefully.
Individual G20 countries are focused on removing impediments to privatesector investment. This may mean less regulation and more predictable policies.The G20 is also working with international organisations toimprove investment climates and leverage private sector involvement. Forexample, we would like multilateral development banks to use their expertise tohelp countries create a pipeline of bankable projects.
Identifying bankable projects is an area where Australia's aidprogram is helping. For example, Australia is contributing $30million to the Philippines Public-Private Partnership Centre to help prepare,tender and award 26 PPP infrastructure projects, valued at over $7 billion.
These projects arefunding highways and expressways, more than thirteen thousand extra classrooms,an orthopedic hospital, an updated train ticketing system and a new airportpassenger terminal.
On climate change; international meetings like the G20 cannot andshould not try to cover all subjects and thus illuminate none - trying to beall things for all people. We must keep a strong and focused economic agendafor the G20 otherwise it will lose its focus. And we must prioritise issueswhere there is consensus within the G20 on taking action. All G20 members agreethat the United Nations Framework Convention on Climate Change (UNFCCC) is theright forum, with the right mandate for international climate changenegotiations.
In fact, G20 leaders have underlined their support for the UNnegotiation process and we've done that since 2009. But of course the G20continues to take practical action to address climate change. For example, bypromoting energy efficiency and the phasing out of inefficient fossil fuelsubsidies. Energy efficiency is one of the most cost-effective ways to reduceemissions and meet rising demand while supporting growth and development.
Inefficient fossil fuel subsidies continue to distort energymarkets and encourage wasteful consumption. The global cost of fossil fuelsubsidies expanded to $544 billion in 2012, despite efforts at reform.Eliminating subsidies such as these would reduce global greenhouse gasemissions by 10 per cent or more by 2050 so I think there should be more of afocus at the G20 on this aspect.
On the fourth theme of governance, the G20 is focused oncontinuing reforms of the financial sector, supporting stronger tax systems andtackling corruption. This year, we want to complete the financial sectorregulation process that was started more than five years ago in response to thefinancial 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 globaleconomy. The ongoing resistance by the US Congress to proposed changes to theIMF is disappointing and we will continue to take opportunities to urge the USto implement these reforms as a matter of urgency.
G20 governments are also committed to making our tax systemsstronger.Of course Governments in developed and developing countries relyon taxes to fund the services their communities need. But it is clear thatinternational tax laws have failed to keep pace with changes in the globalbusiness environment.
We need to address the gaps that allow some multinationalcorporations to artificially reduce their tax bills. G20 countries are workingwith the OECD to establish standards on tax transparency. This will allowgovernments to adopt policies such as ensuring profits are taxed in thelocation where the economic activity takes place. Now that's simple – profitsare taxed in the place where the economic activity takes place.
The G20 is also promoting transparency through greater exchange ofinformation between tax administrators in different countries. Developing andlow-income countries will face unique challenges in implementing the taxtransparency initiatives. And there's been very close consultation with them aspart of this process. These reforms will be most effective if all jurisdictionsare 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 andthat's annually - a trillion dollars annually- money that could be used tobuild infrastructure and deliver services. The G20 is developing principles toimprove the transparency of information on who owns and controls companies.Adoption of these principles will help strengthen the investment climate andreduce this lost revenue.
Citizens from any country, whether they are from G20 member countriesor not, share some fundamental aspirations - a life free of poverty; secureemployment; and opportunities for their children for a better future. Achievingsustainable and balanced growth across G20 economies and more broadly iscentral to giving all people the chance to fulfil their potential.
So in summary, the Australian Government is committed to anambitious G20 agenda aimed at raising the level of the G20's collective GDP bymore than 2 per cent. The Australian Government is committed to policies thatwill facilitate balanced development and growth and as our Prime Minister hassaid, the G20 is ultimately about people it's not governments.
It is in that context that the C20 has an important role inpresenting the voices of the world's most vulnerable to G20 leaders. Andlistening to your recommendations will help ensure people across the globebenefit from the G20's work.
It is a fact that more than half the world's poor population livein G20 countries. So the G20 is working to benefit people in all developingcountries – through more open trade, less regulation, better infrastructure,improved banking regulation and more efficient tax systems. The G20'sdevelopment agenda, including its focus on infrastructure, taxation, financialinclusion and remittances will help the poor and the vulnerable andcontribute to global growth.
I encourage you to generate practical ideas on these topics overthe coming two days. I'm encouraged to hear Tim, that the plan is to have acommunique that is under three pages – it must be very fine print! It is yourideas and your contributions that will help ensure G20 leaders take intoaccount the perspectives of those most in need. I look forward to hearing yourideas on how that 'global birthday cake' can be divided. We value your contribution and look forward to receiving therecommendations from the C20 Summit as we prepare for an important the G20Meeting in Australia, in November. I wish you all the very best.