The world’s most powerful central bank governors and finance ministers gather in Cairns this weekend for a series of highly charged economic meetings – one of their last chances to discuss as a group the problems afflicting the global economy before the all-important G20 Leaders’ Summit in Brisbane in November.
Treasurer Joe Hockey has been in Cairns for much of the week, meeting with Bank of England governor Mark Carney and International Monetary Fund chief executive Christine Lagarde. The official meetings will start on Saturday.
Mr Hockey has flagged that he wants the G20 finance ministers and central bank governors to focus on tax.
“Hopefully this weekend G20 finance ministers will sign up to an agreed global approach to ensure that companies pay tax where they earn the money,” he said this week. “It’s not an easy outcome, but we are going to work damn hard at it.”
He also wanted to talk seriously about the stability of the global financial system, including the rules for banking and prudential supervision of financial markets.
“We believe that at the G20 we can sign off on a number of initiatives that are going to ensure that banks that fail in the future are going to be held responsible for their own failure and systemically important banks don’t have to turn to governments to be bailed out by taxpayers,” Mr Hockey said.
In the days leading up to the event, the IMF said its attendees must seize the moment and commit to “decisive” reforms to bolster global economic growth.
Global growth had been much weaker than expected in the first half of this year, it said, and desperate action was needed to boost growth around the world.
The call put pressure on the commitment made by G20 members at a similar meeting in Sydney in February to grow their economies by 2 per cent above current projections over the next five years.
Mr Hockey said Australia was on track to hit the target, with stronger employment growth this year, but he was aware of the challenge ahead of him.
On tax and regulation, Mr Hockey said it was “hugely important” to discuss the need to have common reporting standards across different tax jurisdictions.
He said tax authorities needed to know when new bank accounts were being opened so they could tell if those accounts were being used to hide money in tax havens.
“We also hope to finalise the rules in relation to shadow banking … [because] it represents a potential significant threat to the stability of the global financial system.”
Mr Hockey said he hoped to “bring to a close” a lot of the “over-regulation” in financial and banking markets that occurred following the global financial crisis.
Other attendees this weekend include US Federal Reserve chairwoman Janet Yellen and European Central Bank president Mario Draghi. Reserve Bank governor Glenn Stevens and Treasury Secretary Martin Parkinson will also attend.
There are five topics on the agenda: global economy, growth strategies, investment, tax, and financial regulation, with side sessions on infrastructure, international business and civil society.