Published on Sydney Morning Herald, The Age, Canberra Times, WA Today websites on Tuesday 11 November 2014
By Tim Costello, Australia's C2o chair and World Vision Australia chief executive
The world of today is doing its best to give the impression that it is falling apart. We are witnessing outbreaks of fundamentalism in many destructive forms. Some nations are retreating in fear from the Ebola epidemic instead of contributing to prevention and treatment efforts. And more and more ordinary citizens are loudly demanding that policy-makers incorporate the notion of fairness into their deliberations on global economic reform.
In this febrile climate, there is a risk that nations will also fall into the trap of pursuing economic tribalism. That is, national leaders and policy-makers will increasingly make decisions which ignore the need for deeper co-operation on a range of complex problems: rising inequality, profit-shifting, the dearth of jobs for young people, and climate change.
The pursuit of a prosperity that can be shared by all is at a tipping point – where low confidence becomes a perpetual dampener on investment, jobs growth and economic development. We need good global governance to stabilise, inspire and settle the brittleness of the world economy.
The G20 leaders, as well as finance ministers and Central Bank governors, have taken up the challenge of delivering economic growth two percentage points higher than "business as usual".
That is indeed a worthy aim – but there is an attached sub-text which needs to be unpacked. Too often we blithely assume that stronger growth means jobs: more jobs, better jobs, jobs that provide a decent living. But we rarely openly explore the question of where the benefits of growth flow.
US Secretary of Labour Tom Perez – in Melbourne recently for the G20 Labour and Employment Ministers Meeting – spoke about growth in the US not flowing proportionately to workers, the so-called "middle class" of America.
In my role as chair of Australia's C20 (Civil Society 20), I also told the same ministers that we can't avoid talking about profits in a world where 85 individuals own as much wealth as the bottom 3.5 billion. A better corporate bottom line – underpinned by "benefits" flowing to consumers in the form of lower prices – is what drives such human miseries as child labour exploitation.
Placing concepts such as fairness and inclusivity at the heart of discussions which set the global growth agenda is not about tacking on caveats to temper the ravages of a free market. It is about addressing the sustainability of growth. A "structural reform" agenda, to adopt the lexicon of economic policy-makers, cannot succeed if it is not underpinned by a broad societal consensus on where the benefits and burdens of growth fall.
Despite the likelihood that the G20 Leaders Summit will be hijacked by the military and security crises of the moment, there can be no doubt that economic insecurity, and the attendant instability it fuels, is enough of a burning platform to force the G20 to look to balanced, inclusive growth as the answer to the economic (and investment) confidence question.
In relation to the G20's tax reform agenda, the inconvenient questions of fairness and equity come to the fore starkly. If the G20 fails to deliver a workable timetable and genuine commitment to innovations in tax transparency, avoidance and profit-shifting, then only the already wealthy will have reason to cheer.
Fairness and equity are strong bases on which to build lasting reforms such as overhauling a tax system to deliver tangible benefits. The (relative) integrity of Australia's tax system is one of our country's real advantages when it comes to delivering the benefits of growth to many. Leaders of developing nations do not have such revenue streams at their disposal, constraining their ability to deliver even the most basic of services to their population.
Those people who exist outside the bubble of economic and legislative debate over global tax reform – but who nonetheless feel the impact of these policies – deserve to be taken seriously when they ask: why do tax havens even exist?
There are strong global growth dividends on offer from embracing reforms including automatic exchange of tax information, country-by-country reporting, and "publish what you pay" provisions.
The lack of transparency in a leaky and opaque global tax system which has not kept pace with the emergence of global value chains undermines confidence and trust, and rightly provokes a desire to name and shame transgressors. Global tech behemoths have already felt the pointy end of these campaigns. I am confident that there is a trust dividend available in response to bold reforms which shine a light on shifty, unfair practices which exacerbate inequality.
Now is the time for boldness, for good global governance rather than national self-interest. European Commission president-elect and former prime minister of Luxembourg, Jean-Claude Juncker remarked in 2007 that: "We all know what to do but we don't know how to get re-elected once we have done it."
This remark is somewhat ironic given Luxembourg's prominence in the debate over tax havens, yet Juncker's core point remains sound. Our job as members of civil society and as good global citizens is to argue the case in support of those leaders who want to do the right thing.