Of the 60-plus official meetings that have taken place under Australia's 2014 G20 presidency, a grand total of one has managed to produce a final communiqué or meeting report that mentions the word 'inequality'. To be fair, it does mention it twice: the 10-11 September declaration of G20 Labour and Employment Ministers first notes that 'tackling inequality (is a priority) for all our economies' and then designates it as an issue for future employment working-group discussions.
Treasurer Joe Hockey answers questions at the Finance and Central Bank Governors Meeting, October 2014.
Yet on a purely public-relations basis, the absence of more explicit references to inequality thus far seems to be oddly out of step with global momentum around the issue. Prime Minister Tony Abbott spoke at the World Economic Forum in Davos about the need for a G20 that reflects the concerns of 'the people, our masters.' As it happens, Pew polling indicates around 70% of the people in G20 economies like Italy, Turkey, Argentina, South Africa, India and Brazil regard 'the gap between the rich and poor as a very big problem' (and around half of respondents in the UK, US, Mexico, Russia – Australia was not included). And as far as issues that concern the general public go, inequality has much more currency than say, the G20's stance on the US Federal Reserve's drawing down of the third round of quantitative easing policy (notwithstanding the latter's significance).
As my colleague Mike Callaghan noted in May, on top of comments from the US President, the Pope and the IMF Managing Director, inequality is well on its way to becoming a mainstream economic concern. This momentum was particularly boosted by the IMF's publication of research by Ostry, Berg and Tsangarides (OBT), who found a robust relationship between inequality and persistently low and unsustainable growth. Since the release of OBT's paper, the Chair of the US Federal Reserve has delivered a major speech on the topic, Rupert Murdoch has spoken about it in his own way and in a report jointly submitted by the OECD, ILO and World Bank Group to the G20 Employment Minister's meeting mentioned above, it was noted: [fold]
On average, an increase in income inequality by 1 Gini point lowers yearly GDP per capita growth by around 0.2 percentage points...While more research is needed to establish causality and the channels through which inequality affects growth, the strong positive association suggests that inequality cannot be ignored by the G20 if stronger, sustainable and balanced growth is the objective.
Yet despite this mounting body of evidence, there was still no mention of inequality in the fourth finance ministers' and central bank governors' meeting in Cairns in September (that took place ten days after the employment ministers' meeting).
The G20's collective apprehensiveness on name-checking inequality has also been reflected in the speeches delivered by the Australian Prime Minister and Treasurer on the ambitions of Australia's G20 presidency – in that it hasn't been mentioned. The closest reference by the Treasurer can be found in a post-speech Q&A response from April. Hockey's full response to whether the G20 would look at inequality in 2014 can be found here, but he essentially states:
...at the end of the day, picking individual groups to benefit is not going to actually deliver the long term gain. We have to have the structural changes to the global economy that lift the tide for all.
Which as a statement, does not seem to square with the research findings of the IMF, or the OECD.
Yet what is particularly striking about the omission of 'inequality' within official G20 documentation thus far is that there are many aspects of the 2014 G20 agenda that, if ultimately successful, would make a valuable contribution to reducing inequality, or at the very least, help us to get a better grasp on the issue. The G20's pursuit of job creating growth, anti-corruption policies and tax transparency measures all neatly fit within the anti-inequality debate.
Indeed, Australia's G20 Sherpa (chief adviser to the Prime Minister on G20 policy), Heather Smith, has been diligently establishing a link between inequality and the 2014 G20 agenda in speeches delivered throughout the G20 economies. Speaking in South Africa, Smith observed:
While some causes of inequality are matters of domestic politics, the G20 can have an impact through its strategies to improve growth and implementing measures to ensure good business conduct. Addressing holes in the international taxation system, which has not kept pace with technology and changing business practices, is important to ensure governments receive the revenue needed to serve their people. Equally important is preventing the proceeds of economic activity being misappropriated through corrupt activities.
'The best way of addressing inequality is through investment in human capital and hence improved employment opportunities – in terms of both the number and quality of jobs, and through the tax/transfer system. Actions to boost workforce participation, especially among women and young people have already been identified as a key priority of the G20's work on employment, and work to improve development outcomes is being integrated into the broader growth agenda'
Even Thomas Piketty, author of the pulsating 700-page-turning Capital in the Twenty-First Century, would probably approve of any G20 leaders' commitment to promote greater tax transparency as a welcome addition to the field of inequality research. Piketty observes that the best estimate of the amount of wealth indolently sitting in financial tax havens is probably on the order of 10% of global GDP; money that could be put to much more productive use if we only knew where it was and whether that figure was even accurate. As the OECD quote above indicates, even just a G20 commitment to find out more about how inequality impacts upon fiscal stability and growth would be welcome.
As a leader-driven process, the two key tools in the G20's belt are its ability to mobilise resources and political will. Approaching the inequality challenge will evidently require a lot of the latter over a sustained period, but the incoming Turkish G20 presidency has decided it is ready to embrace the task, and recently announced inequality will be a core G20 topic in 2015.
Given the 2014 agenda already implicitly has a bearing on tackling inequality, and inequality's inevitable inclusion as an item under Turkey's 2015 presidency, can we expect the Australian presidency to accommodate an explicit discussion about the topic at the leaders' summit in Brisbane, or will it remain the-issue-that-shall-not-be-named?
Photo courtesy of Flickr user International Monetary Fund.
