The G20 countries, representing around 85% of the world’s economy, have agreed to an ambitious economic growth plan to add two percentage points to collective GDP.
If achieved, this would mean an extra $US2 trillion in global economic activity and add tens of millions of jobs over five years.
Treasurer Joe Hockey, chairing a meeting of G20 finance ministers in Sydney, said each country will bring a comprehensive growth plan to the Brisbane Leaders Summit in November.
“We recognise there is a challenge and we are putting a number to it for the first time,” he said, commenting on the G20 finance ministers’ communique.
Each country will have unique plans but common to all is the need to boost infrastructure investment.
And the private sector is in the frame.
“There is much we can do to remove constraints to private sector investment by establishing sound and predictable policy and regulatory frameworks,” Hockey said at the end of the G20 meeting.
He said there was widespread recognition among the finance ministers that structural reform was needed to create economic growth.
“But now is the time to go for growth,” Hockey said. “There are challenges, we know that, but there is determination.”
In Australia, economic growth was running at 2.5%, below the target of 3%, and unemployment was rising.
“In the US unemployment is dropping to 6.6% and we’ve gone up to 6% unemployment,” Hockey sid.
“The only way we can stop the rise of unemployment in Australia … is to have growth that is faster than 3%.”
This means structural reform.
The G20 communique says, in part:
“We will develop ambitious but realistic policies with the aim to lift our collective GDP by more than 2% above the trajectory implied by current policies over the coming 5 years. This is over US$2 trillion more in real terms and will lead to significant additional jobs. To achieve this we will take concrete actions across the G20, including to increase investment, lift employment and participation, enhance trade and promote competition, in addition to macroeconomic policies. These actions will form the basis of our comprehensive growth strategies and the Brisbane Action Plan.”