Good morning. Welcome to CSIS Thank you all for coming My name is Matthew Goodman I hold the Simon chair and political economy here at CSIS and I'm delighted to see such a nice crowd here on an early morning Although I do see that some of you look a little bleary-eyed, which I assume either means that You got up early to watch the lunar eclipse Or that like me you're a disappointed Nationals fan So condolences condolences to the Nationals fans Let me also welcome our many online viewers and remind you that you can follow us on Twitter at CSIS Hashtag CSIS live those of you in the room can also do that if you must but please do it silently Set your devices on stun so it doesn't disturb our speakers so six years ago Next month then president George W. Bush Invited a group of fellow leaders to Washington for an urgent conference on the unfolding global financial crisis To elicit international cooperation among a group of countries representing about eighty five percent stemming the economic bleeding and stabilizing financial markets Thus was born the group of 20 or G20 leaders forum Less than a year later at there at the end of their third summit in Pittsburgh G20 leaders looked back on the unprecedented Unprecedented joint efforts they had made to revive the global economy after its near-death experience and issued this verdict Which surely must be the shortest sentence ever written in a summit communique it worked as? Australia prepares to host the ninth G20 summit in Brisbane on November 15 16th Most people interested in these issues and global economic governance would still look back on those early summits and say without hesitation it worked But with the global economy Still underperforming today with the sense of common purpose that brought the G20 countries together Having dissipated and with the G20 having a more difficult time Demonstrating visible results a lot of people are asking Yes, but is it working? Well, my answer to that is broadly yes as I see it the G20 continues to serve three Important if not indispensable functions in global economic governance first Preparing for the next crisis which surely will come sooner or later Let's call this the fire engine function. Every town needs a fire engine polished and ready to go second setting a global policy agenda Designed to enhance global growth and strengthen the international financial system and third building habits of cooperation among countries that have not had much experience cooperating on much of anything yet have a vital shared stake in the health of the global economy in In addition to these three higher level functions I think the G20 still has the ability to make concrete if incremental progress in addressing some of the world's most difficult economic problems So I do believe the world is better off with a G20 than without one indeed I'd say that if we didn't have a G20 we'd need to invent it but clearly the G20 has work to do in Justifying its role and relevance today and that's the tall order facing this year's host Australia as one would expect Australia has stepped up to this task with enthusiasm as we're going to hear later Australia has sensibly set out a few broad themes for its host year and Has been working hard to get agreement among the G the G20 countries on a number of concrete actions to promote those objectives and This is the key to perceptions of the G20's relevance I think if people see it working towards goals that they broadly accept is worthwhile and important And they see what I would call bricks in the road being laid down towards those goals Then they will accept that all these meetings and working groups and summits is a worthwhile endeavor But we've organized this conference to let you draw your own conclusions about the G20 we've pulled together a real a list of senior officials and scholars and Business people from Australia from the United States from other G20 members To explore these questions to look ahead at what to expect from the G20 summit in Brisbane and to consider ways The G20 can demonstrate its continued relevance as the premier forum for international economic cooperation So we have a rich program today as you as you've seen I'm excited to get started So with no further ado Let me introduce my or invite my colleague Ernie Bauer to come up to the podium and introduce our first speaker Among other things Ernie you can come up Ernie is In charge of our Pacific Partners initiative, which is the sort of center of excellence we have here For among other things all things Australian so Ernie Thank You Matt and congratulations on the on gathering this incredible group of Speakers Experienced experts and and a great audience the morning after a Nats loss Which is a real stinger for Washington? But I'm about to introduce a guy who may I'm not sure where his alliances lie in Australian sports. I guess he would be a Perth West Australia fan, but I know the rabbit toes of just one down under and I don't know how he feels about that So anyway, either he's commiserating with us or he's oh, okay, is he okay? Okay, he is a docker's fan for those of you in Australia watching and if he can disclaim this but when Matt Matt of course ably handles the G20 Portfolio here, but when it comes to Australia hosting I lobbied hard to for a chance to get on the on the docket today and introduce a good friend and a real A real institution I think in Washington someone who's raised the alliance Between the United States and Australia up to levels that we haven't seen before and he's been a champion of this relationship Far longer than his time his five years here in Washington is ambassador Ambassador Kim Beasley is Is a real Man of Australia he's run All parts of Australian Are many parts of Australia's governance structure from finance? finances to defense and security relationships and and and now Diplomacy and foreign policy There's no better person to talk to us today I think to set the set the context anyway for Australia's hosting the G20 in Brisbane So Kim, please come up and thank you for joining us today Thanks very much Ernie. Firstly just to set the record straight because I understand we're bringing broadcast. I'm a dockers fan. I Want that to be noted, but that's a different code, of course the rabbit hose won the rugby league Premiership And it's one of those wonderful rag to riches exercises all Australians will be happy about the rabbit hose win except for their miserable opponents, but that's say That that is a that is a good way to start Well To start a G20 season though I don't think there'd be a single person at the ground who connected the rabbit hose of the G20 Look, I used to be in politics and there was I should take the CSIS for Organizing this this is a terrific Forum it's great for us. It'll be great for the treasurer who'll appear later on so I don't dare say terribly much lest I steal his thunder and And he is definitely a man whose thunder you do not steal Matt Terrific that the the role you've played in getting all this together when I was in politics there was an expression that running scared and All my political life because I had a marginal seat. I ran scared That is you operate on the permanent assumption that you can be Defeated and indeed defeat is likely. I would say that our stewardship Which we've adopted towards this year of the G20 With enthusiasm, I think with a degree of success in the preliminary meetings with With an intense scrutiny as to what we ought to be doing to keep the G20 relevant is all Represented by that expression running scared. We are scared. This might not succeed We are scared for the consequences of ourselves and the globe if it does not We are scared because there are so few points now globally of stability and direction We have a diffuse global political system where by and large problems do not get resolved And who would have thought when you think about it 30 or 30 years ago that we could sit in a situation Where of the three main oil producers of the Middle East two are basically taken out one one continues to operate and Think that in those circumstances you could run a prosperous and stable global economy These are what we are living in extraordinary times in the worst way So for all the institutions that seek to promote growth and stability globally there is a premium on their success and We in Australia look at this very much In that light the G20 has got to succeed It represents 85 percent of global production It is it represents countries which by and large Have a noteworthy international outlook. They're sophisticated and they ought to almost by definition be responsible Or to be clear and is clear that global health matters to all of them and to the others who produce Of course the other 15 percent but the current rates of global economic growth trade and employment as reported by the IMF WTO and ILO are really way below where they could be and certainly way below Where they were prior to the global financial crisis for example the IMF this year predicts 3.4% growth the average Before the crisis was about four the ILO has identified us as having 62 million fewer jobs globally than would have been the case as a pre global financial crisis Growth rates had been sustained When you go comes to global trade WTO is predicting a 4.7% growth this year But that compares with a 6% average in the period of time before the global financial crisis So whatever it is that the incident international institutions have been doing and We're now quite a long time from the peak of that global financial crisis What is not happening is Us being back at at where we were at that point of time I actually think that this is a moment when the G20 actually needed Australia to be in the position where it is and One doesn't particularly want to get up and Australians not the Australian form to to boast national attitudes But I would say that There'd be no member of the G20 more devoted to its success than Australia more Single-mindedly uncritical of a view that this is the and must be the premier Conversation that takes place on the global economy followed by the premier locus of global action we really believe that and so at this point of time when for a whole variety of reasons we're looking at Sources in the global economy of a global management not just the economy of hope and direction This is from the Australian point of view Very much a key moment We put down a an agenda Focusing on three areas. The first is promoting strong economic growth and employment outcomes by empowering the private sector the second is making the global economy more resilient to future shocks and Thirdly strengthening global institutions and ensuring their ongoing Relevance to the global economy of the 21st century as a stack of pieces To the puzzle and all of these and I've got no doubt the Treasurer is going to tell you exactly how that's going to be achieved When he appears here later on during the course of the day But I just want to mention one Proposition that the Australians are focused on as the sort of way in which you achieve They all contribute seriously to achieving those three goals In February at the February G20 finance ministers and central bank governors meeting The G20 members committed to increasing their collective GDP by 2% over five years 2% over what was their prediction as to what they'd be capable of achieving in that period of time Achieving this commitment would be a boost of over two trillion dollars and Millions of new jobs in the global economy The ambition has to be delivered through a combination of trade investment and employment measures Captured in growth strategies, which each country is preparing to collectively work towards achieving that goal This is a first for the G20 and is helping to drive our ambitions Importantly, and this is critical. I mean one thinks what a good idea 2% Over and above what we predict in global growth. If the G20 fails to achieve that It will simply lend massive weight to the view that the G20 is not the appropriate form For a global economic discussion the G the G20 ministers have laid down one of those litmus tests in politics the political equivalent of a red line and The G20 simply has to walk across That red line or the countries in the G20 have to walk across that red line over five years to sustain credibility In the publics which basically by and large determine the characters of the governments who are members of the G20 so we've got a month to go to the Brisbane summit now and We're at the sharp end of trying to reach that ambition or credible policies To achieve that ambition and we've still got a lot of work to do, but we're determined to get there We're going to continue to work closely and productively with the G20 membership and that of course for us is Is massively the United States now for the event today CSIS has put together a high-calibre lineup of speakers From across the government in the private sector to mention a couple of course Australia's Treasurer Joe Hockey and the US G20 Sherpa Carolyn Atkinson will be here. I for one am looking forward to hearing from the G20 But I'm also going to be unpardonably rude having introduced the topic today Because my treasurer turns up at Union station at about 10 o'clock. So I'm out that door and running scared Well, thank you very much Ambassador Beasley those were terrific Opening comments to get us started warmed up and running scared I'm only as afraid of the the the clock. So I want to keep moving here as quickly as we can One thing I should have done at the very beginning But I will do now is to thank our partners in this in this endeavor today the International Chamber of Commerce We have worked closely with them on G20 and B20 matters for several years They have been the International Chamber from the beginning one of the key stakeholders providing Substantive input into the G20 process going back to the Korea summit In 2010 and they've now become some one of the leading forces in helping to shape a Not only a B20 business 20 agenda, but a G20 agenda as well So we're delighted to be partnering with them in this endeavor and that's a good segue into our next speaker Marcus Vollenberg who is a chairman of SEB one of Sweden's premier Financial institutions, but also chairman of the ICC's G20 CEO advisory group which has been doing a lot of the the work or most of the work on the ICC's G20 B20 efforts He also previously had served as the chairman of the International Chamber of Commerce itself and He has been an active engaged participant in global policy discussions for many years he made a tragic mistake early in his career when he decided to go to Georgetown University instead of Johns Hopkins Seiss To do a degree in Foreign Service, but we'll forgive him for that On this occasion, and I'm delighted to invite Marcus Vollenberg up to the podium. Thank you Thank you, Matt. I Don't know very much about you as baseball So Anyway, the Let me just first say thank you CSIS and Matt and everybody for arranging this. This is Always interesting to be Here because of the way you handle all these policy issues always in the front line and always participating in a very important debate, so I've had the pleasure to to work with CSS for a long time in my family as well. So this is great And the G20 agenda is very important and I can't comment, of course on any G20 matters But what I can do is that it from a business point of view and Robert Miller who sits here and Richard Boydor put together a terrific program this summer in Sydney to really actively introduce and and get participation from business around the world in the work towards what G20 leaders are trying to Try trying to achieve Sometimes it's Important to remind ourselves that With the background of what ICC is all about, you know, I'm a Swede. I'm not even supposed to be in the G20 arena But I am there because my family has been engaged in international Chamber of Commerce since it was started And it was started in 1919. I'll give you one minute on ICC because I think very few people know what it's all about 1919 immediately after the First World War business people were absolutely convinced that the only way to stop war and Hostile actions was through more trade and more investments nothing else So a bunch of business people got together formed ICC and It's known I think today For some policy work, but primarily for regulating without government interference The terms of trades between companies all over the world So ICC is a conglomeration of tens of thousands of companies around the world who agrees on how to trade with each other and On top of that having and how to finance that trade and on top of that also Settling disputes through an arbitration court system all over the world. That's what ICC is for you But if I'm here tonight or today to on two hats the first one being chairman of SCB which is Northern European Bank primarily involved with the businesses and also then as previously was mentioned as a group of chairman CEOs who have actively decided to want to participate in Preparing on the business side for the G20 Agenda and why are businesses getting involved in this? I would say primarily because we've come to the conclusion that we have to Influence politicians to tell the business side of story to get This common goal of achieving more growth going forward The business has to be part of that process we believe and that's why people do put a lot of effort behind it So I'll give you a little bit of background from a European part of you So just a few words on Europe and that's where our business is primarily based and Of course, you can be quite concerned about the stagnation signals that we see right now and Also the burdens that are being carried because of all the excess public and private death burden There's still significant adjustments that several countries needs to make to regain competitiveness in our area The fiscal restraints make the room to maneuver very limited In most of Europe the recapitalization of banks is still ongoing in a slow moving way and the European Central Bank is still fighting to restore confidence We are truly experiencing a monetary policy experiment Where the patient the global economy is trying to get its way out of sick bay But we shall salute all our policy makers for keeping the patient alive for the past six years The central banks has not completely gotten its Patient back on its feet, but it is there and it's getting into better shape What we need now is structural reform Last week I spent a few days in Spain and Portugal The financial clear crisis clearly hit that part of Europe very very hard But hopefully the reforms and there have been some substantial reforms taken there The wheels will slowly start moving again So don't get me wrong I salute the EU institutions and many of the things that they've done in their Done to reform and regulate, but as always the piece of action is of the essence and we need more If we don't we might enter into a long period of stagnation One important step that should be taken is to make EU single market more complete For example, I believe that the energy sector the digital economy and the services sector should urgently be included In the quest to form one single market This is one key to unlock greater potential for the European Union going forward and EU Must continue to advocate for a global free trade agenda and short of that diligently work on Regional free trade agreements notably what we're going through together with this country with the United States To try to conclude the transatlantic trade and investment partnership TTIP as Mentioned earlier today the recent evaluations by the IMF and OECD and the World Bank Highlighted the significance of lower than expected growth rates in the global economy This will have a We're impact on job creation and unemployment. We all of course know that already But I believe it has to be underlined time and time again We just cannot lose track on how important the task of the structural reforms are for the development and social stability of our societies on a long-term basis The B-20 believes that to meet the additional the 2% additional growth target G20 countries must commit collectively to implement Unilateral structural reforms that create open and competitive environments to boost employment and prospects for diversified and sustained growth It is difficult not to start off by stating the importance of a stable political Judicial and security environment for any invest investment yet to remember that business people try to avoid risk the whole time That's why this is a very important point Not the least for long-term investment and for the visibility and stability in terms of rules and regulations As are very very vital So through my involvement on a day-to-day basis with FCB I See the need for new regulations that we've seen on the banks But on the other hand, I think it's crucial that we all understand that the combination of all regulations Imposed on banks the last few years has and probably will dampen economic activity This in turn will hurt the recovery. It will also increase the risk for deflationary tendencies We need investment and we need banks to be open for that type of business going forward So when you look at the tension and the turbulence that we see in Eastern Europe Middle East and Hong Kong It is surely affecting the business climate in those days the spillover effects are of course global With political tension protectionist thinking is regrettably on the rise It takes political leadership and determined actions to safeguard our achievements in the global free trade arena Whether it's the single market in the EU or the WTO Which is a very important institution for us who deal with free trade So the question is how do we remain vigilant cautious and responses to all these protectionist tendencies going forward So I would argue that we risk getting stuck in a long-term low-growth scenario In which job creation is so slow that economic and social stand tension will spill over into further political instability In some ways you could say we are in a catch 22 situations Where the investors the money is there But they are not really engaging at this time to the fullest extent So the good news is is That we actually put behind us a period of historical deleveraging throughout businesses and financial institutions They are now the banks are now most cases well capitalized with solid liquidity and thus well positioned to invest If and when the right circumstances would arise But the not so good news is That due to the global downturn there is a clear industrial over capacity in many sectors So even if the economy would pick up at this time It is doubtful that companies would build out capacity in any significant way to cope with that increased demand So how do we break out of this catch 22 of Lower prospects for investments unpredictable situation and actually do create a new wave of investments I'll go into the B20 and the G20 now So the G20 as I said earlier is a very natural focal point for the ICC Over the past six years ICC has been very much engaged in this B20 work for preparation of the G20 and We formed as I did the advisory group to get about 40 CEOs to be involved in this So now when we have Discussed all the issues in Sydney's with in Sydney, which was very very well organized In preparation for the G20 I Think that we have now focused on four major issues that should be important But we think are important for the global economy The first one is to get the effective operation of financial markets as I said earlier The secondly to development of the global human capital Thirdly the investment environment particularly on the development of infrastructure investments and Lastly greater opportunities for trade in goods and services The result of this work is about 20 proposals Reinforcing themselves for actions by the G20 governments On a positive note I'd like to say that the commitments made by all the G20 finance ministers and central bank governors in Cairns last month Are signs of real progress on financial regulation and infrastructure in particular But we should be under no illusion What the challenge we're standing ahead of when it comes to structural reform We must continue to strongly encourage and governments to make real commitments and really Make them and hopefully they will do so implemented in a coordinated way going forward. I Will not stay more on the B20 the G20 business agenda because you will discuss that later on today, but Since I worked as a co-chair on the infrastructure group At the B20 I like to spend a few minutes on that at this point in time So we start with the premise that high quality infrastructure Will underpin and do underpin economic activity within and across national borders It promotes development in emerging economies growth and employment in developed economies and trade between us all On this note, I think it's important to underline the potential for the investment in green and sustainable technology As a particularly promising avenue. I think sometimes we forget in our debate the importance of green infrastructure because We know that there is an investment need But we rarely combine that discussion with the environmental challenges that we actually face And the infrastructure discussion is equally important for those of us living in the developed world Which in my view would risk us to become the old world unless we start getting in more into the infrastructure game and support that It is estimated by 2030 that there will be a gap of 15 to 20 trillion US dollars in infrastructure investments 15 to 20 trillion That's a huge gap and one potential Capital pool to tap is actually the liquidity held by the global banking system to satisfy the new regulation Just imagine if we could get a portion of that to fund infrastructure Projects, this is one key challenge. We all have for the future and There is an estimate that over the long run to close this cap would create more than hundred million jobs and Generate six trillion in economic activity every year That is a price that we would like to achieve And a big part of this solution is greater private sector investment in productive infrastructure partnering with governments to build and manage public investments much more effectively and communicating Infrastructure benefits to the public We made six recommendations to the G20 on this in this prolific task group The first one to set the specific five-year target on investments in infrastructure The second one was to credibly Establish a national infrastructure pipeline of projects that need to be done in each country thirdly To establish an infrastructure hub namely to help businesses governments to facilitate the development and the delivery of a pipeline of bankable investment ready infrastructure Projects it turns out that there are so many different regulatory hinders to infrastructure Investments that you actually need a group just working with that and that's why we call it the infrastructure hub for thirdly Fourthly work towards a greater promotion and protection of cross-border capital flows in an FDI investment model Fifth promote longer-term investments not least in the sustainable technologies by removing unnecessary regulatory debt disincentives and lastly implement a transparent infrastructure procurement and Approval process because when we talk to the members of the different G20 countries This is one of their major obstacles that they face All of this what is this all about this is about to make more investments This is about a way to get forward to make infrastructure a more attractive investment Group as part of the private investment funds that do exist around the world One more thing I'd like to talk about a very crucial Part for business going forward that is that we need further investments into innovative technologies For example, I can look at my own family. We've we've been working with this Industrial sense for many many years back and it always comes down to how do you continue to develop more? innovation going forward and We need to move forward and we need to cross new frontiers In that endeavor, we need to take risk and with that progress will not happen One example we have witnessed is the beginning of the IT revolution when it comes to use in industrial manufacturing and services sector The areas of automation software and big data We are on the verge of a major breakthrough as it how to a shape shape and better serve our societies And finally We need a much more genuine approach to the trade and investment agreement We must be sure to avoid the protective Period that we went through in the early 1900s and that ended up actually in a very bad situation In the 1930s protectionist was a big part of that In today's integrated world Traders global and should be regulated with a global mindset anybody studying businesses around the world and Look at their global value chains of moderns industry can testify to that We should actually call all of us on Politicians to consider how much will be gained if such agreements Came about and how much more business confidence because this is very much about business confidence Would be created for investments Of course, there will be hiccups and issues need to be solved But these challenges must continuously be compared to the huge gains that we all see can come out of it In the case of the EU and US free trade agreement There's an estimate that we will actually add more than 1% of GDP on both sides of the Atlantic if we can get that done Similarly, I think we can get such benefits in other parts of the world. This is why It's so important that the G20 moves forward on their issues So Really, of course, there are many challenges going forward But to me Basically, there are so many positive things So many positive forces that we should spend all our energy to push these issues of investment and trade going forward The fight is about getting more investments and more jobs and more growth And I'm absolutely convinced that we have a chance to do that Hopefully in Australia. Thank you. Well, thank you very much Marcus. That was really Tremendous on a lot of levels Explaining very helpfully and clearly explained the stake that business has in a strong global economy and in the G20's work to that end And the contribution that business makes to that and in particular I like the fact that you highlighted some of the key themes that we're going to be focusing on later in particular trade and Infrastructure investment, which you're going to hear a lot about today. So I really appreciate that. Thank you so much for those those remarks We will now move straight on to our first panel So if I can invite the three panelists for panel one to come up and join me We're going to take a break after this panel But if you need to get up and there is coffee and there are restrooms and things outside But we we will have a short break after this panel. So please come on up panel one Everyone's here, right? Good. Okay Okay, well I'm hard I've said before that there are Tough jobs and there are easy jobs at a think tank and Actually, they're tough panels and they're easy panels to run This is an easy panel. I really don't have to do anything I'm just gonna just sort of start the clock and then let these gentlemen Take over because you have here really No kidding an a list of people who have been working on G20 issues really from day one or even before day one And can give you I think a very rich sense of what the What this forum is is really about and about the the substantive agenda that it's pursuing and and why that's so important so I'm gonna just quickly Say their names and positions because you have bio information in in your packets And I won't I don't want to hold up their presentations at the far end for me your left is Mike Callahan Who is a program director at the G20 study center at the Lowey Institute in Sydney? Mike as many people know was previously the G20 finance deputy for the government of Australia And involved in the G20 from as I say before day one And so he brings a huge rich hugely rich experience to this conversation He'll go first then mark sobel next to mike is my former colleague at the treasury department He's deputy assistant secretary for international monetary and financial policy at treasury There are very few people who can remember a u.s. Treasury department without a mark sobel In it. I certainly cannot And And sadly we are going to lose him if the if the senate In its wisdom Does what the president has asked it to do which is to confirm Mark this is not a public announcement, right? This is already in the public domain I think that mark has been nominated to be the executive director for the united states at the international monetary fund I think that your confirmation will come just as soon as the imf quota reform It has been approved so Um And then right next to me is domenico lombardi Who is director for the global economy program at the center for international governance innovation? and Another real expert who has been deeply involved in global economic governance not just in his current job But in previous senior positions at the world bank imf and other International financial institutions, so it's a really terrific group and i'm going to Stop talking and let mike kick us off Well, thanks very much indeed matt. That's uh, thank thank you very much to csas for hosting this I'll start off In the theme of this is the outlook for the g20 brisbane summit and i'll give An overview from someone outside of the australian government now who has been watching what's been going on the development A commentator on events leading up to the brisbane summit, which is not far off And basically the point i'd make is that what we've seen over the course of 2014 I think we've seen under the australian presidency We've seen some of the strengths of the g20 the strengths and that it can Provide a political focus on issues But we've also seen the challenges and the challenges is Implementation being able to keep that political focus through to the momentum to be able to implement now One of the if I look at Again an overview of what's happened this year. I think one good thing we've seen is that And ambassador beasley referred to this this morning that has been a focus In terms of the way australia has been Organizing the agenda it has given it a focus around these themes of growth and resilience And i think that's very important And all the activities have been linked to this question of growth It's been the prism that all the various work streams have been looked at Now that's very important because I keep saying the g20. It's a political forum It really isn't an economic forum as such It's a grouping of political leaders come together And every political leader like a political party has to have a clear narrative Has to be able to explain to the people what it stands for what you're trying to achieve And I think this has been part of the problem sometimes Of the g20 not having that clear narrative how all these work streams are leading to something So I think that focusing very much on growth this resilience has given it that focus And I think that's important There's also been a linking of the work streams and I think the one where this Is highlighted the most I think is looking at how Developing countries aspects on a particular items how they're how it impacts on them This we've seen it very much on infrastructure. We've seen it on tax There's been a lot of work of looking at now. How does this apply to developing countries? So I think this is another strength of trying to pull all the strands together Because one of the criticisms that's been made is that there's so many competing areas How can you have a focus if you're looking at the whole range of things The we've heard a lot about the the two percent growth target And I think one of the important things about that is that it has changed the conversation within the g20 on growth And it needed to change because the strategy wasn't working in many respects And this was really I think changed the conversation. It's recognized that if you need extra growth You need extra policies. It's as simple as that. It's not as business as usual You do need to do more you do need to take that step. You do need to have that extra policies And I think that's been a very important it has helped to link this theme of growth What we've seen in cans in terms of the policy proposals that countries have put on the table already The assessment by the IMF and the OECD that if these Policies are implemented by the countries that would add 1.8 percent to growth That's quite an achievement And it's a significant success over the preparation of previous action plans from the g20 and we've seen them at every summit and In many respects they have been a restatement of existing policies And as I say if you want to lift the game if you want to lift the growth You need to do more and I think the fact that we've reached the stage that We have countries making commitments of the IMF and the OECD assess if implemented will actually lead to stronger growth That is quite a quite an achievement and again This is I think the focus the political focus that can come from the g20. This is one of the strengths And the focus on infrastructure is very important. We've heard a lot of it We've seen it this week here with the release of the we w e o the IMF's world economic outlook The focus that's put on infrastructure How can that be an important driving aspect of trying to improve the growth? And we are focusing I think the other important thing is that we're focusing on the need to lift the growth potential of countries As the IMF has said we have seen the growth potential of countries being reduced as a consequence of the of the crisis as a consequence of significant unemployment the de-skilling of people the reduction in participation rates and also The reduction in investment that the decline in the capital stock and we know that that's Essential to try and derive productivity growth. So putting the focus on infrastructure. I think is important aspect The one aspect I think is my own personal view where Particular focus has to be put on an infrastructure is picking the right projects That's not the projects which have the biggest political payoff for politicians But it's the projects which those that are selected and prioritized Through a fully transparent Cost-benefit analysis that looks at all the social economic costs involved That's the most critical aspect and that's one where all countries actually don't do very well project selection So I think all with that is a great strength But we have the problem of implementation and at the cans g20 finance ministers meeting the French finance minister spoke about the fog of contradiction He said the fog of contradiction was here We are at the g20 all talking about lifting growth what we're going to do to increase growth And at the same time the international organizations are lowering their forecasts for growth and we're seeing it this week Highlighted the fog is perhaps thicker in the sense of what we've seen now with the IMF Three times this year lowering its forecast for global growth talking about potential of a long period of mediocre growth at an inflection point There is for the public it's very hard to reconcile these things They talk about all the great work that g20 is going to do to lift growth And the IMF lowering their projections their next five year projections lowering them Now this comes back to the challenge and that is the implementation What we're seeing is what the g20 is talking about is what they're going to do Not what they're doing right now what they're going to do in the future and there There has to be this focus on implementation I think Ambassador Beasley said this morning that the g20's credibility is on the line And it is very hard. We're talking about Difficult policies that countries have to go back and win their own domestic political battles Just have to look at Europe in terms of the concern that Europe is facing now And the challenges of getting some of those reforms through Europe, but it's the same in every country It's one thing to make the commitments of what you're going to do The implementation is very difficult and we have to recognize that But the g20 I think needs to really to build credibility is put more and more emphasis on the monitoring of implementation And getting the international organizations to monitor what each country is doing Making the commitments very country specific and monitoring them and going forward The real test of course will come when the international organizations they believe the commitments that the g20 is saying And they increase their forecasts on the basis of what these commitments are seeing and we're not at that point yet Now that's the challenge there the other challenge that the g20 is facing But we're also seeing strengths I think is in terms of showing evidence of cooperation and dealing with international issues And I call the international issues those where no one country can solve acting unilaterally They're ones where you really do need to cooperate. They're ones on international trade international tax globally operating financial institutions And of course this climate change is also one that requires international cooperation But the strength we're seeing in the g20 I think we're seeing it on the work that's been done on strengthening financial regulation And the political drive that's come through the g20 to support the financial stability board in advancing that Of course many of the reforms still have to be implemented. It's a challenge of implementation comes We're seeing it on tax and I think the work on tax avoidance tax evasion. It's critically important This is one where you really do need Cooperation between countries, but it's very very tough But we have seen great progress and I think that's where we've seen the strength of the g20 The fact that we're at the point nearly of ending bank secrecy with the automatic exchange of tax information That's quite a remarkable achievement and I would hope from the brisbane summit We would have at least all g20 members Committing to adopt the automatic exchange of tax information. That's quite an achievement the work that's been done on The corporate tax evasion tax avoidance through the base erosion profit shifting the work that the oecd has been doing The g20 has put the political wind in the sails of the oecd And that really I think highlights really the focusing of political Momentum that can come through the g20 And the it's a very ambitious work program the oecd has and the fact that they've produced seven of their 15 reports over two years that they deliver them in september That's quite an achievement and it does come with the really a demonstration of how you can get a political momentum driving an issue But of course It is work in progress many of the difficult issues are still in front in terms of implementation It's really you've got to wait to the whole package is done before things are going to be implemented And of course what's coming from the oecd is really soft law just recommendations Each country has to take them up and put them in their own national laws but That's that's the challenge the implementation One thing I would hope that may come from the brisman summit is almost a down payment by G20 members in terms of the commitment to dealing with The concerns around base erosion profit shifting and that would be that they would all agree to adopt the country by country reporting of transfer pricing It's a very technical issue But it's a very important one and it really is That it's a point that the Australian Commission of Taxation has made and that is that we have multinational Operations that operate globally that don't operate one jurisdiction Tax administrators have to do the same They have to operate globally They have to have the information flows of what the multinational corporations are doing to be able to Assess whether they've got excessively aggressive tax planning strategies And that country by country reporting is something I think can be done and really would be quite a significant step I also think that what the g20 has to do is recognize that we're seeing a A transformation in the international forum that's dealing with tax international tax issues Which is reflecting the changing nature of the global economy and that is that it's no longer an oecd centric exercise It's now oecd with the non oecd g a non g20 oec Members are part of that But also the need to more formally bring in developing countries in doing with this issue because it's of critical importance to them The other aspect in terms of where international cooperation is vital at the moment is on international trade The india's vetoing of the barley Taking forward the barley trade package. It was agreed in december 2013 that has been a blow to the wto and a blow to really the international trading system as such and if the g20 truly is the A leader among the premier forum in terms of international cooperation It needs to really put confidence back into the international trading system of confidence back into the wto It's not the forum for negotiating trade deals It should be looking at the global system, but it can lead by example in terms of Really going forward with the recommendations the b20 have put out by really roll taking each member rolling back the protectionist measures including non tariff barriers Each member implementing the trade facilitation Measures without waiting for formal gratification through the wto But it also needs to put the strategic direction into the wto and the global trading system That should be based around global value chains that should be looking beyond do are setting some strategic goals there The other thing I just find finish Other important point is the g20 has to and I think this is in the Australian agenda and approach It has to strengthen the international organizations because they say it's a political forum It's not a doer. The doer in many respects Are the international organizations it has to strengthen the imf and it can be strengthening the imf in terms of Monitoring that the imf does of each g20 member's commitment for the growth strategy that's strengthening surveillance through the imf It has to strengthen the financial stability board. It has to strengthen the wto It's hard to imagine a world if we didn't have the dispute resolution mechanisms of the wto. It's quite vital it has to Advance the forum for dealing with international tax issues, which is moving beyond the oecd But it really has to provide that because that is the doer and there is a gap in the global governance structure on energy. We do need to have a new Body that brings together both the consumers and the producers in the energy area We don't have that now. These are things I think are really aspects that the g20 should be looking at because they really are the underlying plumbing of International governance in an integrated world I'll stop there, man okay, thanks very much mike really terrific introduction and and the The the austrian framing of this I really think is is helpful this growth and resilience Sort of as you call it political narrative, which which helps to organize a lot of complicated issues but you very nicely I think fit them into those those different buckets um And and highlighted You know some of the key issues and of course the word implementation. We didn't miss you said it a few times It is a key issue to to all of these issues. So appreciate you're highlighting all of that move right on to mark Okay, thank you. So it's great to be here today with some of my favorite and longtime colleagues Mike and I worked together for years dominico known for years as well and and matt I remember matt when he was the organizer of our treasury softball team and he He imposed green t-shirts with the word debt heads on it Which became the name of our team and we we had a distinguished center fielder shortstop. He played both positions who's Testifying in new york today in a trial But anyway, let me outline today some of the main areas of the g20 financial track agenda From the us perspective So let me start first with the global outlook The u.s economy continues to be a source of strength for the world The imf marked up the u.s forecast Real gdp rebounded in the second quarter Most forecasters are anticipating continued healthy growth in the us Through the end of this year and into 2015 the administration is projecting Real gdp growth of to average 3.3 percent for the next two years Labor market conditions of strength and the unemployment rate is a six year low And over the past 54 months our private sector has created 10 million new jobs so We see the solid underlying momentum of the us economy As due to the us swift and comprehensive crisis response Including macroeconomic support measures to restore the health of the financial sector and structural reforms In contrast the global picture is far less bright With few exceptions growth has slowed over the course of the year And deflation has become a key risk in some parts of the world Global growth forecasts as my notes are being marked down and risks are to the downside In the euro area the protracted recovery from the great recession has failed to gain solid and durable momentum And inflation remains dramatically low Inadequate support for aggregate demand in recent years Particularly in large european surplus countries has left domestic demand well below pre-crisis levels Some recent steps towards a more accommodative pro-growth strategy are encouraging But boosting domestic demand is key and efforts to do so should be supported by decisive actions across the full range of economic policies In japan demand and real wage growth continue to lag This makes it even more important for japan to step up structural reform efforts The critical third arrow of prime minister abe's program to establish sustained economic growth Growth in many emerging markets including china has downshifted Some argue that accommodative monetary and fiscal policies will take away incentives for countries to pursue needed structural reforms In fact macroeconomic and structural policies work together and should go hand in hand Stronger economic growth can also lead to more sustainable public finances Debt sustainability is usually framed in terms of the debt-to-gdp ratio And it is every bit as much about the denominator as the numerator At the g20 the united states has been a strong proponent of focusing on growth and job creation And this is at the top of the agenda We strongly support australia's effort to use this presidency to advance clear and ambitious growth strategies for g20 countries And i agree with mike callahan's judgment That the growth strategies build forcefully upon The progress made last year in the g20 and in terms of shifting the debate Away from fiscal consolidation towards growth, which is clearly where it absolutely needs to be Substantial progress has already been made towards the g20's objective of boosting Collective output by more than two percent over the next five years might reference the cairns summit statement that Projections show a 1.8 percent increase Specific commitments will be announced at the brisbane summit november Particularly where growth is the slowest though countries need to overcome the risks that protracted cyclical weakness pulls down potential growth This problem of so-called hysteresis needs to be tackled forcefully now It is imperative that policies be recalibrated to provide the same kind of comprehensive crisis response that the us has pursued The if the growth strategy initiative is to be successful in boosting potential growth The g20 must work together not only on medium term structural reforms But also on near-term macroeconomic policies that promote demand today In the run-up to brisbane, we will emphasize that all countries facing low inflation and high unemployment Need to work more aggressively to eliminate a large and persistent demand gap And that countries with large current accounts or pluses are in the strongest position to do more to boost domestic demand Second the united states supports a strong g20 focus on investment and infrastructure We see investment both public and private as one key to boosting growth prospects To help drive more public private partnerships and increase private financing for infrastructure here in the united states President obama has established the build america investment initiative This government-wide undertaking will help encourage collaboration between private investors and state and local governments Expand the market for public private partnerships and put federal credit programs to greater and more effective use All of these efforts stem from the recognition that upgrading our infrastructure is vital to propelling Economic growth today and far into the future We also expect the g20 to discuss opportunities to work together to close the global infrastructure deficit Drawing on the tools provided by multilateral development banks and other sources of public and private financing Third the g20's efforts design a more stable and resilient global financial system has been a major success An international financial regulatory reform And its implementation to pick up on mike's theme Remains a key priority for the united states on the road to brisbane The u.s. Has led the effort to raise global standards and promote a safer sounder financial system and a race to the top australia has a strong agenda focusing on robust implementation of financial reforms in four areas So the first area is capital and liquidity We continue to promote In the u.s. The consistent implementation of bozzle three capital and liquidity standards These reforms have helped strengthen the u.s. Banking system our 30 largest banks have raised more than 500 billion dollars in capital since the crisis Already this year agreements have been reached on a common international leverage ratio And the liquidity coverage ratio an important work is now underway to finalize the net stable funding ratio by brisbane ongoing work on enhancing the consistency of risk-weighting practices across Jurisdictions remains critical second area Financial sector areas resolution The most critical financial sector deliverable for brisbane is a robust and credible proposal for total loss absorbing capacity To facilitate the orderly resolution of systemically important banks During its recent plenary meeting in cairns The financial stability board made considerable progress towards this goal And is now in a position to deliver a proposal by brisbane So those of us that had the pleasure of going to cairns. We got to go really far to nail down this proposal This is a major advance in our efforts to tackle too big to fail internationally And protect taxpayers from bearing the burden of any global banks failure The third area Financial sector front This year is derivatives The us continues to lead the way in implementing the g20 pittsburgh summit commitments on clearing trading and reporting of derivatives It is important for other g20 jurisdictions to swiftly implement derivatives reforms so we can better align reforms and avoid fragmentation The fourth area then is shadow banking Um Here the us has implemented key reforms on money market funds Securitization activities and the triparty repo market the g20 must remain vigilant to potential systemic risks that may emerge in this sector I guess that there's one other point i wanted to make about shadow banking I mean many of us in the united states feel that shadow banking is a bit of a misnomer that really it's market-based financed or Indirect forms of finance and this is an important issue because Shadow banking Has a bit of a pejorative connotation but um in fact Many parts of the world many countries need to develop indirect forms of Finance to provide for greater financial reform and liberalization So it's very important that Systemic risks from shadow shadow banking be properly overseen and addressed But it's important. Um Also to recognize the important role that market-based finance can play in helping promote financial sectors and and growth Okay, so uh fourth main area On the financial track this year Is the international tax agenda which mike spoke extensively about As mike noted the g20 has taken up several initiatives that will help combat tax evasion and tax avoidance by multinational corporations And help level the playing field for us workers and firms One major initiative is the g20 oe cd base erosion and profit shifting project or BEPS This project aims to level the playing field and end mismatches that companies exploit to avoid paying taxes While this project will not conclude until the end of uh 2015 The united states is confident that BEPS will produce tangible results and make progress towards accomplishing its goals I think there's important uh overlaps between the BEPS agenda and the debates we're seeing in the united states about inversions In the area of fighting illegal tax evasion The g20 is continuing the work led by the united states on the automatic exchange of tax information with fatka in 2010 the common reporting standard which is the standard for addressing automatic exchange of information will accomplish the multilateralization of fatka Whereas we're now calling it the united states fatka for all um With the continued support of g20 member nations these initiatives will help level the playing field and promote a fair uh tax system um, i'd like to say a brief word on sovereign debt restructuring which is uh becoming A discussion point uh lately The g20 has focused on facilitating the market-based approach of strengthening contractual clauses in sovereign bonds So a treasury a u.s treasury, uh convene working group um recently paved the way for the london-based international capital markets association to propose new clauses um and since then these are being adopted uh the There's new pari pasu clause language and a provision for aggregating bonds in a single vote um and and you probably saw This week that kazakhstan has become the first issuer with both of these new clauses many other countries have issued with the pari pasu clauses we're hoping that There will be more first movers and many more second movers Now while not a panacea this enhancement of the market-based contractual Approach is a critical step forward in strengthening the sovereign debt restructuring process and the international monetary system And one thing one further thing to be clear upon is that neither the g20 nor the imf has any plans to revive Work on the sovereign debt restructuring mechanism finally, um We will reiterate the administration's strong and ongoing commitment to passing imf quota reform legislation As the world's first responder to financial crises and economic threats The imf promotes global growth and stability and protects our national security and the health of the u.s. Economy Passing this legislation is clearly in the u.s. Interest and the world We remain committed to moving forward with the modernization of the global financial architecture Which the united states has led since the creation of the imf and the world bank after world war two Thank you Thanks mark really um terrific um a lot of um important detail in there because uh This is what the g20 has been working on from the from day one and it's important to understand how these um These critical issues of um growth financial reform and institutional reform have been at the core of the the g20 agreement process from the beginning and and and what the outlook is for for moving that agenda forward So thank you for that The medico Thank you. Thank you. I met you. I want to thank you for inviting me to To this panel You know in two days, I've been at css twice Which I think attests to the increase in cooperation between our respective institutions So I also have a disclaimer to make that I don't know much about basketball But uh, you know, I can talk pretty much fluently about soccer if you wish and then You know coming to today's topic I think the fundamental point is really the premise of Our discussion is that as the mf has made clear mike has already recalled that There is a fundamental tension between you know the g20 That is talking about how to revive growth growth prospects And the australian chair has made this a key priority of its own presidency of the g20 and yet, you know the Forecast that the mf has just released the increasing downside risks And the unevenness of growth patterns across different regions of the world in particular, you know the as Mark has recalled the eurozone continues to act as a drag to global economic growth Uh, so clearly there is an evenness and there is an evenness in growth patterns But there is also an evenness I would say in how uh various g20 members Look at Uh, receipts economic policies that are needed that are required to Spur growth and I think the mf has Provided in these days a very powerful conceptual framework To sort of summarize Both the g20 finance finance ministers meeting in currents a few days ago As well as the discussion that Is going to take place in brisbane in the coming weeks And this scheme that was presented by the managing director Of the mf a few days ago is a scheme that essentially consists of three arrows. It's always three And then so on the one hand you have Demand support The need for demand management policies and in fact if you read the latest Final g20 finance ministers communicate in currents You do see, uh, you know statements like persistent weakness in demand We will continue to implement our fiscal strategies Flexibly to take into account near-term economic conditions And clearly you can have also an idea who might have a sort of You know Encouraged this This wording On the other hand, um, you also have, uh, you know those countries who believe that Supply side reforms are key And this is really the way to revive growth And clearly some of these countries are leading economies, uh from the eurozone And uh And therefore, uh, you know, again, you do see some language to that effect Supply side constraints hamper growth Um We agree to consider changes in the composition and quality of government expenditures And tax to enhance the contribution of our fiscal strategies to growth So, uh, these are different views and uh, I have to say that, um, Australian presidency, um, has done a very very good work in terms of Putting them into a sort of consistent, uh framework So, uh, demand support on the one hand, uh, mainly focusing on the short term And, um, on the other hand, you know, the need for supply, uh, side reforms And then there is, uh, the third arrow, uh, that is, uh, um investment And, uh, um, this is clearly a, I would say really a key component of the, um, uh, narrative of the Australian presidency of the G20 Here I detect some slight nuances between what you read in the, uh, in this week's wheel of the IMF And the narrative that has been put forward by the Australian presidency of the G20 The, uh, Australians seem to be focusing more on investment from the private sector Private public partnerships While, uh, in contrast the IMF, um, clearly has a more, uh nuanced view, uh, and it also focuses a lot on, on public, uh, on the need for public investment in infrastructures And of course, uh, you know, this third arrow is, uh, functional to the first as well as to the second arrow In countries where there is lacking demand, uh, countries where, you know, there is a deficit In the, in domestic demand, clearly investment, more investment can help to, um, uh, reinvigorate, uh, demand In other countries that are running at full capacity, uh, Germany to make one, uh, one example Um, clearly investments, uh, would be instrumental to, um, uh, you know, increase, uh, supply to increase productivity So would act more, um, you know, in terms of, uh, structural reforms to the, uh, to the economy Um, so as you can see this, this frameworks, uh, this framework squares the potential dichotomy, dichotomy between a short term A longer term priorities But it also provides an encompassing, uh, framework where you can square, you know, slightly different views between for instance the us, um, as well as, uh, Germany and, uh, and other countries um, uh If we look, uh, again, if we look at, um, um, uh, the recent, uh, topics that the G20 has, has taken up, uh, one, uh, I think one fundamental, uh, um, topic that I would like to stress and mark has actually already done that Is that the G20, um, finance ministers, uh, meeting in Karnes, uh, for the first time to my knowledge, uh, refer to sovereign net, uh, restructuring And, uh, it did so by essentially endorsing a market-based approach Uh, this is the way I'm reading the communique, but, uh, mark who contributed to writing the communique might have, uh, maybe, uh, slightly different view And I think the timing is also interesting because a few days before, uh, this finance minister's meeting in Karnes The ui in new york, uh, was for the first time voting a resolution, um, for, um, um, Initiating work towards a convention That is a statutory approach To sovereign net restructuring and as you know, uh, this is the first time that you had a very high number of countries voting for their resolution About 130 Mainly, um, emerging and developing countries 11 countries voted against that resolution the united states the united kingdom Germany, uh So clearly the biggest the countries that have the biggest financial centers, uh, voted against the resolution and clearly discuss doubts You know, uh, in terms Even if this, uh, convention, uh, is ever gonna be, uh, is ever gonna see the light of the day Uh, clearly not having the main financial centers as part of these efforts would cast, uh, You know, some doubt on the, uh, ultimate effective effectiveness of this convention Assuming that it does move forward, which is which should not be taken for granted Um, so, you know in this debate, uh, I see the g20 has clearly taken a position, uh, you know supporting, uh, Voluntary market, uh, market-based approach. It's also interesting that while the g20 finance ministers Were discussing this issue A country, uh, kazakhstan was also issuing, uh, bonds essentially incorporating the, uh, new standards the provisions, uh, That mark was referring to and that had been issued by the international capital markets, uh, association So I think, you know, if anything, we're gonna see more developments on sovereign debt restructuring But more of course on the market-based approach Than, uh, than anything else. In any case, this still remains an open, a slightly open issue Um, finally, um What I also want to, uh, if I have just a few more seconds, Mark What I also want to, uh, share with you, uh, is a sort of, uh, very preliminary, uh, Results of a survey that we do among cg experts ahead of any g20 summit And in this year, like last year, we, uh, asked that were about 2021 cg scholars How would you rate progress in a global economic governance over the latest 12 months? And, uh, essentially the results of this, uh, survey, which is gonna be posted online in the next couple of weeks Um, they unequivocally point to, um, very minimal progress On average across the various areas that the survey, um, uh, looks at That is, um, macroeconomic policy cooperation, financial regulation, trade and climate change Uh, climate change is the worst where we actually see some regress rather than progress But financial regulation is actually the area where cg scholars have seen more progress Um, and, and, and, uh, in a way, this matches what Mark was saying And of course, also what, uh, you know, the finance ministers, uh, said in the communique So again, in Brisbane, we're gonna see, um, more progress on this, uh, in this area And right now this really is, uh, you know, the, um, the area where, um, More international cooperation is, is taking place Uh, but I would say on the whole, um You know, this survey points to, um, a number of setbacks, uh, clearly lack of, uh, uh, ratification of IMF reform Is an issue, not just for itself, not just because so far the, um, uh, U.S. Congress has not ratified the Seoul package But because by doing so, essentially the trajectory that had been envisaged in the G20 process Has been geopardized, compromised. The idea was not just to pass this Seoul package Uh, but of course, uh, you know, other, um, um, uh, reform package will come along the way Now all this is at the standstill and of course this has compromised the, um, uh, To, to some extent, uh, the willingness, the commitment of emerging economies to rely on the G20 As a premier forum for international economic cooperation So thank you very much, Matt, and I'll stop here Thank you Domenico and, um, Uh, particularly your last point about the, the sort of direction of international governance I want to pursue because I think it's, it's, it's quite interesting, um, and But let me, um, let me first, um, follow up on one other thing, which Mike said And then I'm going to open it up to questions here after one and a half questions Um, maybe two and a half, um, Mike, uh, you talked about implementation And how important that is and totally agree Um, an important part of the implementation mechanisms that the G20 created early on Was the so-called map or mutual assessment process I don't hear that term written or said very much anymore What happened to the mutual assessment process and, and is that, uh, Or has that just been transmogrified into a new form? I'm not called that anymore It's still there. I think if you have a look at what was in the communique from Cairns, uh, You have countries saying that we will be focusing on the implementation Monitoring amongst ourselves, the same, the mutual, um, monitoring of it Uh, but I do think that there's always a limit to how much that can be done The great strength of that was saying this was the reforms were led by G20 members Not imposed by international organizations This was one of the distinguishing elements as opposed to just doing what, um, The IMF was saying in terms of surveillance, etc This was a, a member led driven. This was meant to be very strong I think it has evolved to the point now where we do have countries coming forward Presenting their plans, their growth strategies that they're going to, as Mark said We're going to see the detail will be revealed in Brisbane There should be part of the mutual assessment process of looking at how those are being implemented But I do think that the great strength that's going to come from that is Calling on the international organizations, be it through the, what we're seeing now With the IMF and the OECD providing their almost independent assessment of how is it going I think that's combining the two together It can be the forum, the G20 provides the forum where you, at the political level Where you're saying, well, how are we going? We're holding ourselves accountable As the investors said, we've drawn the line in the sand We have to deliver And you do want to strengthen the, the international organizations in their role In providing the oversight, the monitoring And that's what I think one of the combined aspects you can be Focusing on the implementation G20 members holding themselves more accountable for what they're doing But at the same time strengthening the IMF in its role In the OECD and its role of providing surveillance Providing oversight of how countries are going And that's one of their roles And I do think that we're seeing that evolution take place So I don't think it's to say that the whole concept of mutual assessment Stopped out, it's evolving and I think hopefully strengthening The other thing that you don't hear as much about It's still in there But the Pittsburgh framework was Called for strong, sustainable, and balanced growth And that last adjective, balanced You still see references to But it doesn't seem to have as a carry as much emphasis Is that simply because Mark, the current account imbalances have At least in a cyclical sense adjusted And so there isn't so much of an immediate concern about balances How much is rebalancing still part of the G20 agenda? Thanks Can I just say 30 seconds on your first question to Mike? So there's something called the framework working group Which has consistently met throughout And I think whether we say map or not I mean the map was associated very heavily a few years ago With kind of an indicator based process To look at some of the key countries that Were seen as having imbalances And how to address them That process I think is on a two year cycle But more generally the framework working group continues to meet This year a heavy emphasis besides the macro situation has been This, the question of the growth strategies And the growth strategies have been peer reviewed twice And more work is going on There's also work on kind of accountability assessment So I would say it continues But in a bit of a different form with a different focus But that reflects the evolution of the discussion and focus of the G20 So I welcome your question about strong sustainable and balanced growth And global rebouncing So for the United States global rebouncing Global imbalances remains a major focal point To go back to Pittsburgh for the audience The central thought underlying the strong sustainable and balanced growth framework Which Mike was part of as well at the time Was that as the global economy recovered from the crisis We wanted a more sustainable, we wanted a pattern of growth In which there was greater adjustment by surplus and deficit countries So surplus countries would take steps to boost domestic demand And reduce their current accounts or pluses as a result And deficit countries would increase national saving And we thought this would provide a more sound foundation for global growth Now it is true as Matthew suggested That current account imbalances have been reduced notably in China and the United States And if you look at the global level though Our feeling is that much of the adjustment in global imbalances Is associated considerably with demand compression And so there are active debates So when we talk about what is the macro agenda and how do we get growth I think it relates to the strong sustainable and balanced agenda But clearly it is important we continue to emphasize the role of surplus countries In boosting domestic demand you heard that in my remarks I didn't talk about exchange rate issues But there are important set of G20 exchange rate commitments That you will see basically to promote market-based Or market-determined exchange rates to refrain competitive devaluations To not target exchange rates for competitive purposes etc Those are very important and those are things that we continue to push So you know we're five years past Pittsburgh Perhaps we say the word strong sustainable and balanced growth less Let's be honest there are different views around the G20 on the issue But this is something that remains pretty fundamental to the United States And that we push Yes so on the map what I would say is that You know the idea came about in a context of the G20 process the G20 framework Which essentially envisages a sort of contract If I may use this term between emerging economies and on the one hand And advanced economies on the other So emerging economies namely China would act in a direction to Rebalance their own economies And then advanced economies would work towards Giving emerging economies a stronger voice in global governance fora As I mentioned in my previous remarks this has not been quite the case And therefore I think that the ability of the map to deliver Real results as a result has been compromised I think when you know when the map was introduced China was clearly the country to go to with you know the largest current account surplus I think both in absolute magnitude as well as a percentage of GDP I think what is interesting now is that we have one region in the world Where demand is extremely weak You know this deflation In a substantial number of economies of this region And yet the current account surplus is increasing So I really think that Europe should be doing more to be a responsible partner of the G20 Again on the issue of rebalancing In a way and I think this is really interesting the way you know the Australian presidency Has cast this issue that is politically charged It has cast this issue in a micro-founded way In a way that is sort of less contentious But at the end of the day if you buy in this need for more investments What you are doing on the micro side is yes more investment But the macroeconomic implication is actually you know A rebalancing and therefore you know the rebalancing is still on the agenda However, it has lost the politically charged Sort of Feature and it has been It has been cast in a kind of more micro founded Less politically charged way. Thank you Thank you. Thanks all of you I have another question, but I'm going to withhold that until the end if we have time because I know There are probably questions from the floor. So if you have a question, please raise your hand Wait for the microphone identify yourself and please do ask a question of the panel. Yes, ma'am There's a woman sitting there Daniel, thanks Hi, I'm Nancy Alexander with a hundred gold foundation. Thanks for the great presentations Mike I'd like to drill in on one thing you said and that was about the infrastructure agenda and the importance of choosing the right projects You know, you've really been a leader in That making that message that important message And it would be great to hear how you see that happening particularly given What we see as as three evolving realities one We have nothing against mega projects and transformational projects But you know in fields like energy, they don't have a good record of getting like electricity to the poor Meeting some of the goals that we'd like to see Secondly The groups that we work in where the numerous countries can't get any information at all out of regional Pipelines and project preparation facilities just none In fact, they've been threatened when they've asked in some countries and lastly the world banks Independent evaluation group came out with some pretty sobering results on public private partnerships For instance that given the uncertain data on efficiency That ppp's may not provide any additionality And secondly what I found is a really shocking outcome of the evaluation namely The lack of any quantification of contingent liabilities on a project Level that's really a recipe when you're talking about mega projects for a debt disaster If you're not quantifying the contingent liabilities, but Your perspective on choosing the right projects Yes, um, I think that Like many of these things it's going to depend on country circumstances always And I think it's one of the things is wrong to have a sort of a one size fits all For a solution to everyone's problems. We do know that The private sector tapping that liquidity can be such an important source for financing infrastructure The public private partnerships. They're a complex Approach to doing it a lot of capacity building is required In many respects though, that's the financing angle and a lot of the focus has been on the financing But before we get to the financing No matter how you're going to finance it the economic value of the project the social Whether it passes the net social benefit test has nothing to do with the financing I think this has come out on all the work of the international organizations we're seeing And that's why I think we're seeing it the references are there or the focus on infrastructure It's within the work of the b20. They say we need to have this pipeline of bankable quality Projects that have been rigorously cost tested It's there the point I'd make is that Doing it is a very hard task and making sure you do it where you take into account the full consequences of the It's the economic the environmental the social and also the long-term It's a very different approach you're looking at it than just looking at the financial viability of it You have to look at the long-term consequences of how it fits into the the network We know that that's a challenge and we've seen that in terms of the Certainly through the multilateral development banks That's why I think that one of the strengths of the G20 can do is sort of reinforcing good policy And what I would like to see would be a lot more focus on one of the most important things as you picked up Nancy I think is transparency is such an important aspect of this I know that the the b20 recommends that to try and remove the political influence And we do know that political influence can result in a lot of White elephant infrastructure projects as opposed to the more efficient use of the resources to provide the Improving the long-term productive capacity of the country One of the ways of doing this they've suggested that there'd be more project selection done through independent bodies now, I think that independence is a variable concept in terms of what Some countries may say is independent in terms of going through both the project selection and at the operational stage and the procurement stage Etc. The one thing that's so important in this and then we reinforce is transparency because if you have Very full transparency of all the factors that have gone into consideration It doesn't matter who's doing the assessment. It's there for public scrutiny And I think that that's it's there in the work that there have been recommendations from the b20 it's there and We're seeing it from the international organizations in the work that the IMF has done in the chapter in the weo They make it very important that it is getting the quality infrastructure projects is where you get this benefit If you don't have the quality infrastructure projects Well, you're not going to get the benefit for growth and it's not going to get the the added the fiscal multiplier that they See positive fiscal multiplier. They're talking about And the best way of doing that I think is this transparency and that's why I think it would be good What I've been sort of I've been advocating is that this is in terms of trying to reinforce good policy in all countries is putting the emphasis on Transparency of all the factors that go into the selection Oh and also the operation of the infrastructure project. It can be a great anecdote To ensuring that you do get that the quality investments Thank you. Hi, it's john keo here from the australian financial review Question for mark You were talking about the differences between the surplus and deficit countries there in the context of some of the g20 discussions We've seen a big appreciation in the u.s. Dollar over the last month or so Does the u.s. Believe that that's largely down to economic fundamentals Or do you see that that might be due to some intervention that might need to be discussed This week at the g20 and imf meetings And secondly on the BEPS project I understand the u.s. Treasury is largely supportive of it Although wants to look at the details of it to make sure it mix mix as well with america's tax system But I understand some republicans in congress who hold fairly senior positions on finance committees are not supportive of BEPS Do you need the support of congress to legislate this and how are you going to achieve that? Okay mark so It'll come as no surprise to the audience on the first question. There's a long-standing Policy in the united states that only the secretary of the treasury can comment on exchange rates and I'm not the secretary of the treasury Um, you know on on BEPS, uh, there's a lot of work to be done. There's 15 areas There's uh, there's working on I forget if seven or eight this year seven seven this year eight next year There's a lot of work to be done We're committed to it. We're working hard on You know the various measures we'll see what we can do And uh, you know, I think you're You know, you're raising a broader point about legislation and tax reform in the united states. There's an active debate going on I think there's a lot of widespread belief that there isn't need for tax reform But that this is going to require Looking at the legislative agenda and uh, so, you know, we will This is a debate the secretary is You know eager to engage in and we'll be looking at to work On uh in the future Okay, I know you laugh at mark's answer on the exchange rates But if you had also been taken into that dark room your first week at treasury and um and put had a bright light shining Shown in your eyes as mark and I and anybody else that the u.s. Treasury had don't talk about exchange rates Um, you would understand the position. Um, yes, ma'am Thank you, christie hues from reuters. We heard earlier about the massive infrastructure gap that's expected How much is would it be appropriate and realistic for g20 countries to commit this year in funding to start to fill that gap? I think that's impossible to put a quantifier to quantify exactly the amount It's going to be on country specific It's each country some countries will not have the same priority for infrastructure as others China I'd say as an example where it's not really in terms of what china has to do is move away from investment World construction a lot of it is improving the investment climate. I think that's in It's been made clear. I think in the cans communicate that For each country and I hope that this will be in the growth strategies What measures they're doing to improve their climate for investment? That's been a lot of recommendations from the international organizations there We also know that the takes from The planning stage to introduce Infrastructure is quite long From the early, you know, it is To have you want to have the pipeline there but to actually get it going is taking long So I don't think it's one that you can put a specific target in a year of how much you want to do What you want to do? Well, I think what the world wants to see is that there's clear progress in going forward in doing these in identifying them in progressing the the range of issues that have been outlined in terms of Trying to facilitate the whole operation through this information hub getting better Sharing experiences of how to solve these issues all of that's going to take time So I think putting a 12 month number around it would be rather meaningless Others are thinking let me ask the question I was going to ask before which is a two-part question about the the agenda the breadth and the depth of the agenda So on the breadth of the agenda for the g20 I mean it started really with those three kind of core areas of growth Financial system reform and international financial architecture Reform and it's spread now to a number of other areas Well spread within those areas and to another a number of other areas from energy to anti-corruption and development to a number of other things And so I'm wondering what people think the panelists think about The trade-off between you know getting more important and pressing issues onto the agenda and and being able to remain focused on on the key things that really one can One should prioritize and can realistically get done in any particular time frame So that's the sort of breadth question and the depth question is Uh, you know, I don't know about you, but my brain hurts trying to remember all of the details of these different G-sifis and ify's and OECD's and BEPS and everything and some of this is very technical Important stuff And the detail matters the devil in the detail really matters And yet this is a political body as Mike said and it's a meeting of politicians and leaders who Can't be expected to remember or even learn all of those acronyms And so I wonder how do you how do you bridge that gap up and down between the kind of the hard Detailed work that needs to be done in this group and the and the sort of political Guidance that's needed to keep the agenda moving forward You can comment on either or both of those any any of you maybe we can round up by doing that Maybe starting with Domenico and working down Sure Well, I think on that the Australian presidency Struck the right balance because clearly the the g20 doesn't have any more a Political momentum in the way it had, you know, the apex of the crisis for a number of reasons that have nothing to do with the Australian presidency itself, of course So what what they did I think was to essentially leverage on domestic policy initiatives by the g20 member countries However, at the same time they did try to provide, you know a framework To push a little bit the g20 membership and I think the outcome of that is this You know number of initiatives that the IMF and uacd have estimated will add 1.8 percentage point growth in a few years from now And then what you know, we're also seeing is more emphasis on financial regulation as I said Again in the area of the reform of the international financial architecture. That's the only area where you can see You know something happening because clearly the aspect of reforming international financial institutions is Something that is clearly off the table now for the reasons that we have just discussed I think when one aspect on which, you know, personally, I'm a little bit unclear on what the Summit or the Australian presidency Has been delivering is trade Because it's true that you know on the one hand we see the emergence of these mega deals That you know are not multilateral are not global in scopes Typically are between a large economy or region and other economies But it is also true that these mega deals are essentially negotiated by you know different mega deals negotiated by a lot of g20 countries And and clearly here, you know, I I would see Much more scope for you know the Australian presidency To provide additional impetus additional momentum on these trade deals that again are functional To a growth agenda Are, you know, not short term, you know the g20 to ensure legitimacy and survival cannot focus On your short term issues if These are not really compelling. So Right now the the issue is really making sure that Growth prospects become more even across the membership They solidify and I think this is where we are right now So we need more focus on growth and trade should be And a much more important component than I actually have seen, uh, you know in the uh, Australian presidency. Thank you So, um On the breath issue, um So like you, uh And you know, we discussed this when you were in the government working on these issues, uh You know my that I'm in the keep it simple camp. Um Now, uh, I work on the finance track. Uh, this afternoon, uh, miss carolin ackinson Our sherpa will be here which covers the full breadth of issues finance and and other issues These issues energy development anti-corruption trade are usually handled out of the sherpa track. I'd say in the finance track Uh, the agenda still is macro growth fin reg Uh, if he architecture we've added tax um So I think in fin reg we are keeping it simple now when we came out of the crisis, uh You know we were responding On the macro policy front very clearly Domenico and mike have, uh underscored that, um There's a structural dimension to growth and so I think if you look at, uh, for example the australian agenda on growth, um It very much emphasizes, uh Uh, a range of other things, you know trade Competition Employment, um, and they see those as very pro-growth medium term Measures to uh boost capacity infrastructure investment, of course falls in that category as well Um, so maybe I would you know, I would think part of the answer To you is also that what is seen as the Foundations for growth Is a bit different now Then when we were working together and just worried about, you know, how do we get out of this? Deep hole, um And that makes me just say one thing in response to dominico's earlier presentation, which is that, um, I think there's, uh A clear agreement in the g20 That, uh, we need to look at aggregate demand and aggregate supply Now turning to the depth issue, um So I think you're right, uh about the techy, uh Techiness, I mean you see it in fin reg in particular, uh tax, um Something also I find fairly technical I mean what is the Do the g20 leaders or finance ministers have to know all the technical details? Um, I would say That a main function is to provide, uh The british always used to like like to use the word steer and is to provide a political steer Guidance direction where we're headed Um, and to provide cover And I think fin reg is actually, uh, a fascinating case study of this. Um So, you know before the crisis, you know You know, we have very independent regulators in the united states and uh, and before the crisis, I would say, you know Of course our regulators are still very independent Um before the crisis highly independent, I would say now What's been transformed is that? um G20 leaders communicates g20 finance ministers communicates Kind of set out some broad parameters for the direction of the financial regulatory agenda and then The fsb Kind of loose and I want to underscore the word loosely loosely coordinates. So the the fsb is not You know a standard setting in the banking realm the bozzle committee is But the leaders give the leaders and finance ministers give direction the The fsb kind of oversees that the various directions are being carried out by be at the bozzle committee be at isco the international association for insurance supervisors um, and so I think there's a little bit of a more coherence and and Organization, um to the governance structure in financial regulatory reform um, but again, I think it is the existence of the g20 Leaders and finance processes that have allowed this kind of new I wouldn't it's not like a black line very clear But it has allowed this new kind of governance structure to evolve and as I said in my statement We've made huge progress. You see it in bozzle three Leverage ratio The liquidity ratios you see it in the resolution work. Um, you see it in the otc derivatives front Even if that's coming along more slowly than we anticipated Shadow banking as well. So so I think it's I think We have to look at the leaders and the finance ministers as giving us direction in which I'm providing kind of this cover for a lot of the technical work to take place It is a very broad agenda It covers working groups across so many things I think I counted 69 different preparatory meetings right across a whole range of issues and a lot of good work has been done I wouldn't deny it and I think as you've said at the beginning There's a lot of just the buildup of between countries that don't have this habit of cooperating There's a lot of valuable work But when you come to a leaders meeting when you come to a summit as I say this is a political issue It has to have some headline outcomes You can't come to a summit and say well We've made all this incremental progress across all these bits of aspects on the development committee and And this aspect on financial regulation on some aspects Isn't that you've got to be able to sell the story It's got to be able to communicate and leaders have to lead and you have to be using what leaders can do The great strength of the G20 is that leaders can come together and what leaders can do is they can push the political envelope If you structure it that way it's they can take it beyond what officials can do There's a limit to what officials can do in terms of pushing things across the frontier That's what leaders can do. That's when the big great strength in the G20 when leaders do that So they have to focus on some outcomes There has to be headline outcomes And it's not to diminish all the other good work that's being done across the whole range of issues But when leaders come out of a summit The great test would be do they all say these were the same three key or four things that were achieved at this summit Part of the problem of summits we've seen now when leaders come out when they talk to their press they They have different emphasis of what was there and immediately they're on to domestic issues and there's not sort of The same narrative coming out of what's being achieved So I would hope that looking towards the way the lead-up that's being taking place now What would be some of the headline outcomes that would come from the brisbane summit is very much this one of growth And the focus on growth has think as marcus said has many dimensions there It picks up what's happening on labour market issues it picks up on infrastructure It picks up competition it picks up and trade is mixed But you've got a very clear change of conversation with pushing growth at structural reforms We're pushing the growth envelope out there and we're going to hold ourselves accountable to it The other one I would put an emphasis on is tax This is a key issue now particularly of civil society the great concerns and inequality This is the red light up there of this is they want to see progress international progress on tax And as they say the g20 has to have some down payment There's good work there, but to maintain that political momentum They have to actually focus on some issues the one I would say that they could Focus on now is saying adopting this country by country reporting They can do that now without waiting to the full completion of the 2015 package But tax has to be up there and be seen to be achieving something And the other one that dominica has said I think it has to be trade They In there is a real problem now in terms of where the international trading system is The g20 has to worry about all those other countries out there who are not in the g20 They're not in these preferential agreements as mark wallenberg said this morning About it is so important the international trading system the global trading system reducing protections There's rising protectionist pressures the g20 has to lead on that So there has to be a clear statement a clear focus pushing the envelope on trade That's not to diminish all these other things But these are the what I would put out there as these headline outcomes and that would make a successful summit Excellent. Thank you so much. Please join me in thanking our panelists for their great contributions