Australia’s G20: we need government action, not ideology
Australia took over the chair of the G20 this month, and the first meeting of ‘Sherpas’ took place in Sydney. The Russian G20 in St Petersburg in September put unemployment and job creation at the centre of global economic debate, but failed to deliver the action to restore jobs-led growth or the leadership that in 2008/9 prevented the global financial crisis (GFC) turning into a depression.
It’s good to see the G20 agenda for 2014 stressing the need for implementation and delivery, and that’s what union leaders called for at the Sydney meeting. But the new Abbott government has put pro-private sector ideology at the centre of its objectives for the G20, which could derail the global economic recovery everyone claims to want. And there’s a blunt contradiction between the praise for market freedom in most of the agenda and the commitment to restrain the financial sector and clamp down on corporate tax dodging which post-GFC G20s have yet to complete.
Throughout the sections on growth and jobs, Tony Abbott’s strategy erroneously claims that the only way to stimulate more economic activity is easing up on business constraints, creating a better business environment, giving businesses more freedom.
It’s certainly one way to encourage businesses to invest their growing war chests of cash, although it might be suggested that business freedoms have already increased massively over the last quarter century without delivering the desired result. And there are of course other ways to promote growth. Windfall taxes might be one way to address the profits businesses have made despite or in some cases because of the recession. And printing money may be considered a short-cut to higher inflation, although if wages were to rise in real terms, inflation is a good way to deal with the debt burden facing both private households and governments.
Trade unions are currently urging European governments to borrow the money businesses have built up, using Eurobonds to unlock their idle assets and devote them to investment through the ETUC’s New Path For Europe. At a global level, that sort of co-ordinated government action for sustainable investment would be much more likely than a hands-off, deregulatory approach to businesses.