News

Coalition challenged by dual roles as global and national leader

Geoff Kitney
1,338 words
19 February 2014
The Australian Financial Review
AFNR
First
11
English
Copyright 2014. Fairfax Media Management Pty Limited.
Australia's prominence in world affairs is at odds with its government's domestic focus.

The irony is not lost on some veterans of the long history of Australia's efforts to punch above its weight in
international affairs. Just as the country's clout in the world is at its greatest potential, it has in office a
government deeply sceptical about the efficacy of multilateralism and the institutions and mechanisms that
manage it.

The Coalition is more assertive of what it sees as Australia's national interests than any modern Australian
government. It is little bothered by criticism that it has retreated from the "good global citizen" ambitions of the
previous Labor government.

Yet it finds itself in power at a time of the coincidence of Australia holding the presidency of the Group of 20
leading economies and a seat on the United Nations Security Council, which gives it unprecedented
prominence in world affairs. Both are legacies of the ambitions of previous governments.

Former Howard government treasurer Peter Costello initiated the idea of meetings of the finance ministers of
the 20 leading economic powers in the wake of the Asian financial crisis in the mid-nineties. Kevin Rudd
threw the full weight of Australian diplomacy at moves to turn this into a G20 leaders' meeting in the wake of
the 2007 global financial meltdown.

Rudd launched the Australian bid for one of the two-year, temporary seats on the Security Council for much
the same reasons as he threw his weight behind the elevation of the G20 to a leaders' level forum – to
provide a platform for his ambition for Australia, under his leadership, to be a bigger player in multilateral
affairs.

But Labor's big global ambitions quickly became a political target for Abbott when he became Liberal leader.

Abbott's instinctive populism told him that voters didn't like the idea that Labor was spending taxpayer money
on foreign follies. On a range of issues, Abbott promised an "Australia first" focus for a Coalition government.

The collapse of UN-led climate change diplomacy, in which Rudd had taken a muscular role, was a critical
moment in recent Australian political history. Discredited climate change multilateralism was the launch pad
for Abbott's ultimate political triumph.Abbott targets foreign aid

Abbott tapped into voter scepticism about Labor's global ambitions at many levels. Foreign aid will be a key
target of the Abbott government's budget cuts – with strong public support.

Abbott's pledge to aggressively assert what he defined as Australia's national interests has been especially
robust on border protection and has overwhelming public backing despite the disruptive impact Abbott's "turn
back the boats" operations is having on Australia's most important foreign relationship: Indonesia.

Even on economic management, Abbott has been at odds with the major international institutions which offer
independent commentary on economic management.

Page 1 of 3 © 2019 Factiva, Inc. All rights reserved.

The Rudd and Gillard governments failed to counter Abbott's attacks on their economic record despite
consistent praise for the Australian economy's performance from the International Monetary Fund, the World
Bank and the OECD – as well as the highest ratings from the major ratings agencies.

Abbott managed to persuade voters to ignore Australia's economic performance relative to the rest of the
world and to accept the Coalition's damning critique of Labor's record of debt and deficit.

All this might seem like a record which does not recommend the Abbott government to take on the task that
the accident of the timing of Australia's presidency of the G20 has assigned to it.

But Australia's leadership role comes at a time of growing disillusionment over the record of, and the outlook
for, the G20.

Critics say the G20 is moribund, the sense of purpose with which it was created at the height of the global
financial crisis now lost as its members revert to a "beggar thy neighbour" approach to the state of the global
economy.

As the world economy has begun to recover from the devastating effects of the global financial crisis, G20
members have shifted focus from their collective interests to their national interests. The upgrading of the
G20 to be a leaders' forum as well as a finance ministers' forum has expanded its agenda of issue and
diffused its focus.Low expectations for meeting

The G20 finance ministers who assemble in Sydney will come to the meeting with a confused agenda of
issues and ambitions, amid low expectations about what they can achieve.

Despite attempts by the head of the IMF, Christine Lagarde, to revive the Bretton Woods spirit of mutual
interest and collective action to deal with the new threats to the global economy there appears to be little
chance of any agreement on co-ordinated action on the crisis or the stampede of capital out of emerging
economies.

Even on what had appeared to be the achievable goals of harmonisation of financial sector regulation and
reform of the international taxation regime to reduce corporate tax avoidance, the G20 finance ministers are
struggling to finish the task.

Former federal treasurer Wayne Swan has argued that, at the very minimum, the G20 finance ministers must
agree to a robust "action agenda" on global tax avoidance, based on proposals of the former Labor
government which would require multinational corporations to full statements of their taxable incomes and the
taxes they pay.

Swan said that an "average outcome" from the finance ministers meeting would be unacceptable.

The critical point here is that Swan, among many others, believes the G20 is on the verge of an existential
crisis.

The concern is that time is running out for the G20 to show that it has the will to take concrete action to deal
with multinational policy challenges.

A weak outcome from the finance ministers' meeting would cast a black cloud over the G20 leaders' meeting
in Brisbane in November – a gathering of world leaders unprecedented on Australian soil.Joe Hockey's
ambitions Not all those eligible to attend will attend, with some deciding they have more important things to
do.

But Treasurer Joe Hockey is talking up the prospects for the meeting, particularly on the regulatory and
taxation reform issues.

Hockey intends to use this, his first G20 meeting and the biggest stage he has ever stepped on, to make his
presence felt. Senior Australian officials say he wants to bring to the discussions the robust, straight-talking
approach he uses in domestic politics, an approach which might "shake the place up a bit".

Given that Hockey will co-chair the meeting (with Reserve Bank governor Glenn Stevens), he will carry a
heavy responsibility for the outcomes – and the judgements that will be made about them. Hockey says that
he wants to "drive a strong agenda on growth" and that the outcome of the meeting will be important to global
growth prospects.

There is no disagreement about the virtues of promoting global growth. But there are deeply diverging views
between developed and developing G20 countries about what this will require.

Hockey wants less regulation and freer markets, and has argued ahead of the meeting in favour of central
banks (particularly the US Federal Reserve) being free to set policy in the national interest, an approach
Page 2 of 3 © 2019 Factiva, Inc. All rights reserved.
which does not sit well with the interventionist and collective action ideas which dominated the G20 agenda
after the GFC.

His challenge will be to prevent deepening differences on how to deal with imbalances flowing from the Fed's
tapering operations from overshadowing the meeting and preventing other meaningful outcomes.

The Abbott government does not want Australia's presidency to come to be seen as having accelerated the
ultimate failure of the G20.

But the irony of this is that, in the longer term, if the G20 does not prove to be anything more than a talkfest, it
will be of only marginal interest to those on the Coalition side with little time for multilateral politics.

Document AFNR000020140218ea2j0001w

Page 3 of 3 © 2019 Factiva, Inc. All rights reserved.