Ladies and gentlemen, it is a real thrill to be here and I do want to start by thanking each one of you for coming to Australia for this B20 Summit. The G20 matters and it will matter more if it does more, and it will be able to do more because of the input that we are getting over the next two days from you. Every one of you has given up very valuable time to participate in this. You are making a contribution, not just to your business, not just to your country, but to the wider world by your participation in this gathering and I thank you so much for doing so.
If you really want to get something done, you ask someone very busy to do it. The Australian Government asked Richard Goyder to chair the B20 (the leaders of the largest businesses from the world’s 20 largest and most representative economies) because he runs one of the largest companies in Australia. Wesfarmers, Richard’s company, employs over 200,000 people, has 500,000 shareholders and it sells almost $60 billion worth of products every year. Just the man with some spare time, we thought! Richard gets it. He gets business and he doesn’t waste time. He knows what it’s like to make a profit and provide a return and so do you, each one of you.
I made a promise at Davos this year: I said that the G20 had to be so much more than a talkfest. Otherwise the leaders of the world’s largest and most representative economies could be accused of wasting each other’s time. The whole point of assembling leaders representing some 80 per cent of the world’s Gross Domestic Product is jointly and individually to encourage measures that will make everyone on this planet better off. This year’s G20 will focus on just a few key subjects because progress usually comes one step at a time. The G20 will deliver a three page communique in plain language because we need to talk, not at length about our good intentions, but concisely and precisely about what we will do to put good intentions into practice.
I should say what an honour it is for me to address this assembly of the world’s most influential business leaders. You have come too far to let this B20 become its own talkfest or just a box ticking exercise. You are here because you know that the G20 matters and you want this year’s G20 to mean action, not words.
The G20’s job is to promote policies that will create wealth, but you – the B20 – know more about creating wealth than government. The B20 knows more about creating wealth than the G20 – because that’s what business does every day. You create wealth. Business values more trade and freer trade, because more access to markets creates more wealth for all. You know that freer trade means more jobs and lower prices. You know that no country has ever taxed or subsidised its way to prosperity. You know that the answer to debt and deficits is not even more debt and deficit.
As G20 chair, Australia knows that business is the primary creator of national wealth – business, not government. Business, both big and small, is the engine room of job creation.
We know, here in Australia, that profitable private businesses are at the heart of the strong economy that’s needed for a strong and stable society. We know that making life easier for businesses to invest, to employ, to produce and to trade is what drives national growth and prosperity.
Here in Australia, we are trying to lead by example.
We are scrapping bad taxes like the carbon tax and the mining tax and we’re cutting company tax.
This year, we’ve concluded free trade agreements with Japan and with Korea and we hope to do so soon with China.
We’re establishing a one-stop shop for environmental approvals and have already approved new projects worth over $500 billion since last year’s election.
We’ve held our Parliament’s first ever red tape repeal day to cut 50,000 pages of unnecessary government regulation and legislation. We have identified for scrapping, red tape costing our citizens and our businesses over $700 million every year.
We are investing $50 billion in infrastructure and doing so in a way that invites an even bigger private sector contribution to this investment.
We’re subjecting major infrastructure investment to rigorous cost-benefit analysis and working on a rolling 15 year list of infrastructure priorities.
We’re re-establishing a tough cop on the beat to combat lawlessness in our construction industry.
Of course, we are continuing to welcome foreign investment, because foreign investment has been critical to sustaining Australia’s prosperity.
We are, I want to stress, getting our Budget back under control by reducing projected debt by $300 billion over the next ten years and bringing the Budget back to balance within four years. We are shifting the focus of government spending from short-term consumption to long-term productive investment.
We are doing this because we know that economic growth is not given; it is earned by continual decisions to stay competitive.
Each country’s circumstances are different, but this is what we are doing here in Australia to boost our growth and to boost the world’s growth, participation and productivity.
It’s my hope that this conference – this conference that you are attending today and tomorrow – along with all the other meetings associated with the G20, will help to create a blueprint for national leaders that will take the global economy back to strong, sustainable and balanced growth. You are not here for a holiday, you are here because you want to promote and support real reform in your own countries. You are here because you want the G20 to make a difference, not just a noise.
Governments can work together to create the environment where business is empowered to do what you do best – drive growth; create jobs; and raise living standards. That’s our aim, because stronger economic growth is the key to addressing almost every global problem. More growth makes every issue easier to fix. More growth means more revenue. More growth means more trade. More growth means higher wages. More growth means more jobs. The International Labour Organisation says that to restore employment levels to those before the crisis requires 30 million new jobs right now. Yes, the immediate economic storm of 2008 has long passed, but in too many places, the wreckage remains.
Australia’s task is to keep the G20 tightly focused on higher economic growth and to resist the temptation to deal with every ill that the world may face. Sure, many of those ills desperately do need addressing, but in other forums, not the G20 which is primarily an economic one.
Our focus will be economic growth. Earlier this year, the IMF and the OECD released analysis outlining ambitious but realistic structural reforms in the G20 economies that could lift the G20’s combined output by more than 2 per cent within five years and in so doing, create millions of new jobs. In February, all the G20 governments committed themselves to this agenda – to structural reforms in product and service markets, to measures to enhance trade and competition policy, to actions to increase labour productivity and participation and to steps to promote quality investment, especially in infrastructure. This matters. It really does matter because the global economy remains fragile. Output is below potential. Business is wary. Investment is constrained. Trade growth is well down. Six years on, we are still in the shadow of the crisis. Six years on, what’s necessary is a forum focussed on private sector-led growth rather than the ‘government knows best’ responses.
The lesson of previous reforms here in Australia and elsewhere is that business must be an advocate in the court of public opinion for policies that encourage trade, strengthen the economy and adhere to sound business principles. Business can’t legitimately ask government to introduce policies that it’s not prepared to argue for in public as well as in private. After all, business will be the beneficiaries as well as the drivers of stronger economic growth.
This commitment that the G20 made to raise collective GDP by an additional two per cent over five years is our call to action. And to date, I’m happy to say, the signs have been promising. The country growth strategies of G20 members are taking shape. They contain several hundred proposed measures, but quantity does not always equal quality. Current estimates suggest that the proposed growth strategies will deliver about half of the extra growth required to meet the 2 per cent target and to create the wealth and the jobs that we all seek. It’s vital that every one of you prosecute the recommendations that you finalise today and tomorrow.
As you know, the key to achieving our growth goal is structural reform and that’s hard and essential. Macroeconomic policy cooperation remains important and it will continue to be discussed at the G20, but we really are at the limits of what macro measures can do to drive growth. What we really need in the medium term, in fact, is macro policy returning to normality. We need to manage the exit from unconventional monetary policy and to restore governments’ fiscal position to sustainability. To do these things and still have our economies grow, we need to make these right but difficult decisions on structural reform. We need to unleash the forces of competition by opening markets for trade. We need to unlock productivity by investing in infrastructure. We need to unshackle business by reducing regulation and by accepting that some risk is unavoidable. We need to bring down barriers to our citizens participating in the workforce.
Strong action by G20 governments can deal with these issues that all too often hinder growth. For example, strengthening trade requires getting the right infrastructure in place and having people with the right skills to manage the international flow of goods. Getting infrastructure in place requires unlocking capital and kick-starting investment, and unlocking capital means having the right regulatory conditions and incentives in place for the financial sector. These issues are interconnected and should be tackled simultaneously.
G20 countries’ growth strategies are about maximising global growth by agreeing to drive growth and reform at home. On Saturday, G20 trade ministers will meet and they will receive your recommendations. I hope that you will remind them that the critical test of trade policy is whether it helps business in the real world. We need to lose the mercantilist view that a ‘concession’ in trade negotiations can only be granted for something given in return. Trade liberalisation is worth doing, even unilaterally, because free trade means more efficiency; more efficiency means more wealth; more wealth means more jobs. That is the message that Australia will bring to the G20 leaders’ meeting in Brisbane in November. Production now takes place through global value chains. Products are no longer made in any one country – they are made in the world – so our approach to trade does need to adjust. The ability to import matters as much as the ability to export and the ability to move goods around matters more than ever.
As G20 host, Australia has brought policy-makers and business together to identify practical ways to increase long-term infrastructure financing. The global infrastructure gap is now about $1 trillion a year. Boosting investment in infrastructure can generate jobs in the short-term and lift the productivity of our economies in the medium to longer term. Governments can’t finance the world’s infrastructure needs on their own as we have found here in Australia and seen elsewhere. This is an area where greater collaboration between government and business is needed. Your work to date has shown that there are ways for closer collaboration between government and business can occur and I am looking forward to receiving your recommendations.
Another priority is lifting workforce participation. Strengthening our economies and our communities means making fuller use of people’s potential, because Australia and too many other economies face a future of ageing populations and declining workforces. We have to act now to prepare ourselves by making more use of the people we have. Too many young people remain unemployed right around the world. Here in Australia, we are moving to ensure that people under 30 are either earning or learning and that leaving school to go on unemployment benefits is simply no longer an option. Across the globe, workforce barriers still exist for millions and millions of women. In Australia, we are moving to introduce a standard paid parental leave scheme based on people’s actual wage to help women to have both a family and a career if that’s their choice, and we are also improving access to affordable childcare to boost participation. We’re making measured but significant change to our workplace relations system to ensure that productivity is an important factor in matters before tribunals. All G20 members want to address underemployment, informal employment and workplace safety. Again, to do that, we need business to join with us, not just in the design of the solutions, but in their implementation.
I am seeking, as I’m sure all G20 leaders are seeking, from you, practical, realistic and achievable ideas for governments to implement. Then, our work is to turn your ideas and discussions into action. I hope you’ll be specific and targeted over the next two days in your advice about what we can do to help facilitate stronger growth. I hope you’ll accept that reform is never easy. If it were easy it would have been done already. It does take courage to challenge entrenched ideas, even ideas that are holding our countries back. It requires government and business too to explain and promote the reforms that we all need. The beneficiaries of stronger and freer and more dynamic economies are not just households but businesses, their workers, their shareholders who will trade more, employ more people and become stronger. So, this is what the G20 is about: stronger economies, more jobs, more profitable businesses and more opportunities for the people of our countries. If change is to take place, there has to be a constituency for change. I am relying on you to be that constituency for change. Every G20 leader is relying on you to be that constituency for change that will benefit every citizen right around the world.
I want to thank you – really thank you – for your presence and for your work in ensuring that Australia’s G20 succeeds in this vital and noble task.
Thank you.
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