Australia, the hosts of the Group of 20 meeting, claimed credit for a year-long effort to get members to adopt “extra” reforms that would add $2 trillion to the world economy and create millions of new jobs. Prime Minister Tony Abbott said the plans would make the whole planet “better off”.
Not everyone shared that prognosis.
“Basically it appears to be a collection of wish lists presented from each country,” said Sakong Il, who chaired a presidential committee to prepare for the Seoul G20 summit meeting in 2010.
Without rigorous guidelines for implementation, it becomes “another talk shop, another photo session”, said Sakong, who now runs an independent research institute.
The OECD made a brave stab at estimating that the 620-odd pages of reforms could add 2.1 percentage points to global economic output by 2018, but only if fully delivered, and even then it acknowledged a “high degree of uncertainty”.
Australia itself put forward many measures first touted in a general election over a year ago, some of which are stuck in parliament and highly unlikely to survive in their current form.
The United States’ offering, the second shortest at just 15 pages, began with an increase in the government’s spending ceiling, a measure passed as long ago as December last year. Most of the remaining proposals need approval from Congress, an optimistic assumption now that both houses are controlled by President Barack Obama’s Republican opponents.
One measure, comprehensive immigration reform, is so anathema to Republicans that Obama may have to use executive action to force through even a limited package.
Illustrative of the overall theme was South Korea’s contribution, which stretched to 114 policy measures under 33 categories over 30 pages. All were a repeat of what the government has announced since the current finance minister took office in July.
The thrust of Beijing’s commitments were a repeat of its own 3rd plenum reform plans, and key proposals from Indonesia on funding for infrastructure date back to late last year.
Reuters’ analysis showed no new commitments from governments in Germany, Britain, France, Italy or Spain over and above what was already in train.
There is no sign of extra spending in the European Union. Germany’s investment plan next year amounts to 0.1 percent of GDP, and it will balance the budget for the first time since 1969, tightening fiscal policy rather than loosening it to spur growth.
Japan’s pledges were almost immediately undermined when data showed the country had lapsed back into recession, which is expected to prompt Prime Minister Shinzo Abe to postpone a controversial hike in sales taxes and call an early election later in the day.
Neither did the UK sound entirely in harmony with the G20’s message of hope. No sooner was the summit over than Prime Minster David Cameron took to the opinion pages of The Guardian to tell readers that “red warning lights are once again flashing on the dashboard of the global economy”.
“As I met world leaders at the G20 in Brisbane, the problems were plain to see,” said Cameron.
He must have missed the memo on the importance of shoring up global confidence. (Reuters)