The G20 has lifted its ambitions for global growth but will they be achieved?
Economists I’ve spoken to say they won’t be revising their forecasts for world GDP upwards on the basis of the Brisbane declaration.
It’s not clear how making people pay more for health and education will boost world growth, but by elevating these issues to the G20 summit, the PM was clearly trying to convince the Australian public that there is a link.
Indeed, some say the bigger and more immediate boost to global growth will come from the dramatic fall in the oil price over recent months—it’ss fallen 30 per cent since June, to its lowest level in five years.
Treasurer Joe Hockey's singular achievement was to get G20 leaders to at least agree to a growth target, which was lifted over the weekend to 2.1 per cent.
G20 nations—which represent 85 per cent of global economic activity—have lodged around 1,000 policies which they say could achieve that growth.
Australia's contribution included much of the government's current policy agenda including the Budget savings measures, some which have not yet passed the Senate, its free trade agreements, its road building plans and its ‘war’ on red tape.
The US is nominating $400 billion in new investments in transport, education and healthcare, while the EU says its plans to implement a single banking union will help boost growth in Europe.
All these initiatives will be monitored by the IMF and the World Bank, who will report back to the G20 on their progress.
There are some big questions hanging over the submissions, though, not least of all Australia’s.
There had been talk that the European Union would stump up an additional 300 billion Euros in new infrastructure investment to stimulate the stagnant European economy, which is the real dead weight on global growth right now.
That didn't seem to eventuate; perhaps German Chancellor Angela Merkel put the kybosh on it, given Germany's antipathy to anything that smells like fiscal stimulus.
How easy will lifting growth be for Australia, considering a slowing China and falling commodity prices?
The glow at being at the centre of global economic affairs will fade pretty fast for the government.
In three weeks, the treasurer will release the Mid Year Economic Outlook, which will reveal just how much the sharp fall in iron ore and coal prices, and a slump in wages growth, has hit tax revenue and the government's long term goal of returning the Budget to surplus.
MYEFO will also have to contend with the fact that several Budget measures remain stuck in the Senate.
The treasurer says he won't be proposing additional Budget cuts in MYEFO because that might hurt growth.
The government does seem to believe it can increase growth by forging ahead with its existing Budget savings measures, though. Its $7 GP co-payment and plans for university deregulation are among the policies Australia put on the table at the G20.
This would explain why Prime Minister Tony Abbott, to some criticism, singled out these policies—and the difficulties the government faced in getting them through the Senate—in his speech to leaders at the start of the summit on Saturday.
It’s not clear how making people pay more for health and education will boost world growth, but by elevating these issues to the G20 summit, the PM was clearly trying to convince the Australian public that there is a link