Mark Thirlwell is director of the International Economy Program at the Lowy Institute for International Policy.
Economic interests
Australia has had a long-standing interest in securing the installation of the G20 as a more representative and hence more legitimate and more effective body than the G7/8 at the apex of the international economic architecture. Not at all coincidentally this would of course thereby secure Australia a seat at the world economy’s top table and, moreover, do so alongside a significantly expended Asian presence.
Australia owes its place in the G20 to its activist and independent-minded economic diplomacy during the 1997-98 Asian financial crisis. Since then successive Australian governments have championed the grouping, with current Prime Minister Kevin Rudd and Treasurer Wayne Swan building on earlier work by Treasurer Peter Costello. In particular, Rudd and Swan have worked hard to try to ensure that it is the G20, and not some other, smaller, Australia-excluding body, such as the sometimes mooted G-14, that will steer the global economy. Hence, the declaration in the Pittsburgh communiqué designating the G20 as the premier forum for international economic cooperation represents the successful culmination of Australia’s key objective.
In addition, Australia has significant interests in the coordination of economic policies, the delivery of sustainable international growth, and the structure and scope of any future international financial regulation. It also has strong views on the need to reform the IMF in order to boost the representation of the major emerging markets, and in particular those in developing Asia. Here the Pittsburgh Summit will be judged to have at least made some moves in the right direction, albeit with such judgments subject to the usual caveats regarding the gap between intentions and implementation.
Finally, Australia remains strongly committed to open global markets in general and a successful conclusion to the Doha Round in particular, and here the Summit will likely be judged to have made minimal progress.
Political interests
Given that Australia succeeded in its main objective for Pittsburgh, the early reviews have been positive. Although sporting finals dominated the front pages of most the national newspapers at the weekend, the G20 still merited inclusion. For example, the front page of the Weekend Australian included a story with the title ‘PM wins place at new seat of power’ with the opening sentence ‘Australia is a founding member of the world’s new premier forum for global governance and economic management.’ Similarly, the Sydney Morning Herald’s front page offering had the title “G-whizz: high-flying PM changes the world” and the opening line “The Prime Minister, Kevin Rudd, has won a significant victory for Australia with the Group of 20 largest economies replacing the G8 as the world’s leading forum for economic co-operation”, while the equivalent headline for Melbourne’s The Age was “Major win for Australia as G20 permanently replaces the G8”. The Australian Financial Review had a banner headline on “Rudd’s new world order” and a story on page two headed “A global role for Australia in G20’s rise”.
Not surprisingly, Prime Minister Rudd is likely to be rather pleased by all this, not least since it represents a fairly potent rejoinder to past opposition jibes about unnecessary prime ministerial international grandstanding, as captured in the snarky sobriquet ‘Kevin 747’ that was aimed at the current PM’s apparent willingness to jump on an aircraft at the drop of a hat.
There are also some secondary benefits for Prime Minister Rudd in terms of an international stamp of approval for his own government’s economic response to the GFC, perceived as very successful domestically, although the adverse impact of the crisis on Australia to date has been very modest by international standards.
International interests
Australia’s desire to see the elevation of the G20 in the global economic architecture is part of a much broader and extremely ambitious push by the Rudd government to see the country become a more important player across a range of international issues. These include the current campaign for a non-permanent seat on the United Nations Security Council in 2013-14, the talk of forging an Asia Pacific Community, and policy ambits regarding nuclear non-proliferation and an international climate change agreement.
With respect to the G20, Rudd and Swan have sought to leverage Australia’s position as one of the best-performing developed economies and the kudos that this has attracted for the functioning of the country’s policy regime and financial sector, as well as draw upon Australia’s increasingly deep economic integration with the dynamic Asian region, to help make the case that Australia has something worthwhile to contribute to international economic policymaking.
The outcome of the Pittsburgh Summit therefore represents a significant success for the new strategy and – at least to some extent – a validation of the case for Australia’s enhanced international role.
In addition, Australia’s presence in the G20 alongside a range of key regional players – China, Japan, Korea, India and Indonesia – represents an important opportunity to further develop important bilateral and regional relationships.
Global leadership
Australia has had a relatively ‘good’ economic crisis to date, and while there is a recognition that the G-20 meetings have played their role in helping stabilise the overall international economic environment, the limited economic fallout experienced so far means that the importance of the G-20 in reassuring a worried public has been limited. Instead, the arrival of the G-20 in the public consciousness has been viewed more in terms of its part in the ongoing narrative about the economic rise of ‘the rest’, and in particular the growing importance of the economies of developing Asia and the consequent changes in economic arrangements that this shift will entail. It is also seen as signalling a recognition of Australia as a global player.