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 Opening a meeting of G20 finance ministers and central bankers,
Australian Treasurer Joe Hockey outlined on Saturday an ambitious
agenda of boosting world growth, fireproofing the global banking
system and closing tax loopholes for giant multinationals.
"We have the opportunity to change the destiny of the global
economy," said Hockey, who back in February launched a campaign to
add 2 percentage points to world growth by 2018 as part of
Australia's presidency of the G20.
That goal has seemed ever more distant as members from China to
Japan, Germany and Russia have all stumbled in recent months. Just
this week, the Organisation for Economic Cooperation and Development
(OECD) slashed its growth forecasts for most major economies.
U.S. Treasury Secretary Jack Lew called for the euro zone and Japan
to do more to boost demand and revive activity, signaling out
Germany as having scope to do much more thanks to its burgeoning
trade surplus.
Berlin was none too pleased.
"We will not agree on short-sighted stimuli," a German G20 delegate
said, arguing that in most countries debt was still too high to
allow for increased spending.
Germany has been under intense pressure to allow the euro zone to
ease back on fiscal austerity and to boost its own economy through
more government spending or tax cuts.
More than 900 individual growth proposals had been submitted and
analyzed by officials, said Canadian Finance Minister Joe Oliver,
the co-head of a G20 working group on growth. "We believe that these
actions in total - and if implemented, and that is key - would come
very close to 2 percent," he told Reuters.
French Finance Minister Michel Sapin was certainly putting the
accent on near-term stimulus.
"I want to repeat and say again that the immediate concern with the
shorter term is very much expressed," he said was his message to his
G20 colleagues. "The immediate concern is really to recover growth
while global growth in 2014 is still subdued."
GEOPOLITICS A THORN
The outlook for activity has not been helped by geopolitical
tensions, from fighting in the Middle East to the strife between
Russia and Ukraine.
Hockey said Australia, as the G20 host this year, had sought
feedback from other G20 members on whether Russia should attend the
meeting of leaders in Brisbane in November.
There had been calls from some quarters to block President Vladimir
Putin from attending the summit given Russia's actions in Ukraine
and the downing of airliner MH17.
The overwhelming consensus was that the door be left open to
continue engagement with Russia, said Hockey.
Geopolitical tensions were also high on the agenda when financial
policymakers of Japan, China and South Korea held their first
trilateral meeting in more than two years in Cairns on Friday.
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Another risk discussed was the Ebola epidemic as Sierra Leone began
a three-day lockdown to try and stem the disease. World Bank Group
President Jim Yong Kim on Friday warned of the economic danger if
fear of the disease caused consumers and travelers to change their
behavior.
So serious was the situation, he said, that the United Nations was
taking a leading role. Sources indicated the G20 communique on
Sunday would include the need for international cooperation in
fighting the outbreak.
"The (UN) Secretary General is handling Ebola as if it were sort of
an outbreak of war, where instead of sending peacekeeping troops,
we're going to send in people who are going to be battling Ebola,"
Kim said.
TAX TROUBLES
Also on the drawing board at the G20 are plans to stem the loss of
revenue from multinationals shifting their profits to low-tax
countries, potentially reclaiming billions of dollars.
Taxation arrangements of global companies such as Google Inc, Apple
Inc and Amazon.com Inc have become a hot political topic following
media and parliamentary investigations into how many companies
reduce their bills.
The OECD has unveiled a series of measures that, if implemented by
members, could stop companies from employing many commonly used
practices to shift profits into low-tax centers.
Since countries began targeting cross-border loopholes five years
ago, an additional 37 billion euros ($47.5 billion) in tax had been
recovered, OECD Secretary-General Angel Gurria said, adding that
firms were estimated to be holding $2 trillion in low- or no-tax
countries.
"The whole world needs to go after tax cheats," Hockey said about
the measures, which he hopes will be adopted by at least 44
countries.
(Additional reporting by Leika Kihara, Ian Chua, Byron Kaye and
Cecile Lefort; Writing by Wayne Cole; Editing by John Mair)
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