This year Australia is hosting the G20 summit, a yearly forum where political leaders and finance experts from 20 of the world’s major economies will meet to discuss ways to improve the global economy and the economies of their respective nations. But how does it all work? Crikey dissects the event.
What does G20 stand for?
G20 stands for the Group of Twenty and is a political forum for the governments and central bank governors from 20 of the major economies of the world. Nineteen countries and the European Union participate in the G20 each year, including Australia, China, France, Germany, the United Kingdom and the United States. The EU is represented by the European Central Bank and the European Commission, an executive body responsible for legislation and day-to-day running of the EU.
How did it all begin?
The G20 was originally proposed by former Canadian prime minister Paul Martin. Founded in 1999, the G20 started out as a forum for finance ministers and central bank governors to meet annually to discuss economic issues such as how to strengthen the global economy, reform international financial institutions and improve financial regulation.
After the global financial crisis broke out in 2008, the G20 quickly became an international leaders’ forum.
Is it just a one-off event?
Planning for the G20 usually begins close to a year before the leaders’ summit, and a number of events are held in the lead-up to the summit to discuss the themes of each year. A few meetings have already been held around the world to discuss topics such as investment and infrastructure and tax and employment.
The actual leaders’ summit runs for two days, this year November 15 and 16, though the pre-meetings are part of the entire event and inform the final decision-making. The pre-meetings involve finance ministers, central bank governors and heads of state or government. Coupled with reports from the World Bank and the IMF, the pre-meetings usually run for two to three days and involve recommendations for the G20 summit. The leaders’ summit finishes up with the leaders’ communique, a series of public statements that contain specific pledges to national policies and future decision-making for G20 members.
How many people are coming to Brisbane?
This year, approximately 4000 delegates and 3000 media representatives are expected to attend.
What are the topics being discussed this year?
A number of themes this year include tackling corruption and global unemployment, developing an agenda for economic growth and investing in infrastructure.
Politics lecturer at Monash University Dr Zareh Ghazarian told Crikey, “For the domestic point of view the government will want those sorts of things to be big in people’s minds. It’s almost a way to help justify the G20 meeting, and I suppose re-confirm the importance of the forum.”
In January this year, Prime Minister Tony Abbott gave a speech to the World Economic Forum at Davos, saying:
“At the heart of the G20’s work is building the resilience of the financial sector; helping to prevent and manage the failure of globally important financial institutions; making derivatives markets safer; and improving the oversight of the shadow banking sector.”
Ghazarian believes Australia has a positive contribution to make. “Australia has a very good story to tell about economic management … The global financial crisis of course was affecting many countries in very serious ways, and Australia escaped pretty much unscathed so it has some strengths and some significance definitely in G20 affairs,” he said.
Do any real decisions come out of the G20?
Policy announcements and commitments are non-binding, meaning the leaders don’t have to honour their commitments.
Examples of promises that were kept include the 2009 London summit, which led to a $1.1 trillion package for the International Monetary Fund as well as a tripling of their lending capacity. In the 2009 London leaders’ statement, the leaders specifically pledged:
“We are undertaking an unprecedented and concerted fiscal expansion, which will save or create millions of jobs which would otherwise have been destroyed, and that will, by the end of next year, amount to $5 trillion, raise output by 4 per cent, and accelerate the transition to a green economy.”
They also issued the more general statement:
“We will take, at the same time, whatever steps we can to promote and facilitate trade and investment.”
Ghazarian says G20 pledges aren’t necessarily set in stone. “I think they might set the scene, but the exact policies, the issues and exactly how governments deal with the issue, that will still be decided in individual governments and individual states,” he said.
Some policies have been slow to progress, including correcting global economic imbalances, increasing the voting share of emerging economies at the International Monetary Fund and eliminating fossil fuel subsidies (which Australia denies having). Not all promises will be agreed upon. There will, of course, be pledges agreed upon by the entire G20, but also group pledges (e.g. Italy and France unite) as well as individual pledges (e.g. the US commits).
Some finance experts are calling for this year’s summit to consider removing big banks’ “too big to fail” guarantee. But what will the big announcements be? We’re just going to have to wait and see …