G20 lagging on growth targets – Australia

Turkey’s Finance Minister Ali Babacan (R) chats with Australia’s Reserve Bank Governor Glenn Stevens (C) and Australia’s Treasurer Joe Hockey (L) during the G20 Finance Ministers and Central Bank Governors official group photo, in Sydney on February 22, 2014. AFP FILE PHOTO

SYDNEY – Reforms proposed to lift global growth in line with a target set by the world’s biggest economies earlier this year are so far falling short, Australian Treasurer Joe Hockey said Monday.

In February, the G20 economies vowed to boost global growth by more than US$2 trillion over five years, shifting their focus away from austerity as a fragile recovery takes hold.

But as Australia prepares to host the G20 summit in Brisbane in November, Hockey told The Australian newspaper that more work needed to be done.

“The submissions are not meeting our ambitious target at the moment and I expect that a number of jurisdictions will improve their effort,” Hockey told the broadsheet.

“I’ll be speaking to individual finance ministers over the next few weeks, around the world, to encourage them to be more proactive.”

G20 finance ministers and central bank governors said in February they aimed to lift their collective gross domestic product by more than two percentage points over the next five years.

In a communique following their meeting in Sydney, the world’s top economies said the “realistic” target could be achieved by increasing investment, lifting employment and enhancing trade.

But a report in The Australian Financial Review said modelling showed member countries had committed to reforms that would not go even halfway towards the growth target.

Hockey expressed confidence Monday that the reforms could be achieved, particularly given support for the agenda from the economic powerhouses Germany, China, and the United States.

“It comes down to the goodwill around the table,” he told The Australian.

“There was, in the end, no disagreement in February and in fact our friends in Germany were, by the time of the Washington finance ministers meeting in April, (German Finance Minister) Wolf Schauble was among the most emphatic supporters of the target.”

In April, G20 finance ministers and central bank chiefs pledged to follow up on reforms but there was little firm action on how to stimulate world growth further.

At the time, Hockey said that when the G20 made the commitment to enhance growth in February, “we really meant it. It wasn’t just a rhetorical figure put in the communique for publicity purposes”.