A panel of experts offered advice on enhancing Australia’s prosperity at the Australian Institute of International Affairs’ National Conference. Hale Yildiz reports.

Editor in chief of The Australian Financial Review Michael Stutchbury opened discussion on Australia’s industrial strategy and economic policies since the 1970s, addressing the question “will Australia maintain its status as a top 20 nation?”

Reiterating on Australia’s productivity-led boom since the 1980s, Mr Stutchbury emphasised that Australia is currently at its “high point of prosperity”. However, beyond the looking glass, faced with diminishing national income trends, he identified the nation’s biggest challenge as finding new avenues to generate productivity and growth in the post-global financial crisis era.

This year’s B20 Sherpa for Australia, Robert Milliner, picked up on the business agenda of the G20 with respect to growth plans devised by each country to be brought into the summit discussions to be held this month.

Due to worldwide concerns over global recession—as well as mounting worries nearing the end of Federal Reserve’s quantitative easing period—G20 finance ministers had agreed in February to a minimum two per cent growth target for the upcoming five years. The new measures agreed by each country are to be announced in the upcoming Brisbane Summit.

This target comes as a result of the largely unsuccessful Doha round of trade negotiations and stalled progress with the World Trade Organisation (WTO).

Against this global backdrop, Mr Milliner identified key challenges facing Australia as boosting foreign direct investment (FDI) and job creation. He emphasised Australia’s direct interest in taking active part in the G20 talks as an effective bulwark against the ‘spillover effect’ of global financial shocks.

Mr Milliner concluded by identifying four critical areas in Australia’s future path to prosperity to be discussed in the upcoming Summit:

1. Structural flexibility, as a vital industrial strategy to cope with future financial shocks
2. Obstructions in the free movement of goods, capital and labour, as deepening imbalances in labour supply and demand
3. Policies to enable greater market efficiency
4. Anti-corruption measures targeted to further ensure integrity and credibility.

Director of the Lowy Institute for International Policy’s G20 Studies Centre Mike Callaghan emphasised that global economic future depends on policy settings undertaken at national levels, identifying domestic policy-making as the biggest issue for ensuring an integrated global economy. He identified two specific areas to be addressed in the Brisbane Summit as trade and tax.

Given the multi-sourced global network of production of finished goods, Mr Callaghan stressed the need to adapt changing trade policies and the shifting nature of comparative advantage. Australia, he pointed out, needs to be efficient, with smoother custom procedures, less red tape and more labour flexibility.

With regards to tax policy, it is generally understood that contemporary global dynamics are making it increasingly difficult to control and regulate areas where value-adding occurs. In response to the growing challenges around effectively regulating tax evasion, Mr Callahan stressed the need for effectual forums to establish consistent economic instruments.

He concluded that Australia—and consequently other advanced economies—would be “better off” in assuming an active role in G20 discussions.

Beyond these key points, a number of specific issues were raised including around domestic reform, industrial transition, trade liberalisation, demographic challenges and environmental degradation. Growing challenges with regards to public perceptions of the G20 and its power to implement its decisions were noted as major strains on the legitimacy of the entity as a body.

There was further consensus on the need for Australian domestic economic policy to adopt measures to respond to China’s lessening demand for cheap Australian fossil fuels as well as China’s shift to green industry.

Hale Yildiz is a former research intern at the AIIA National Office. She can be reached at hale.yildiz@hotmail.com.