If I interpret Treasurer Hockey's G20 growth target correctly, it simply means that at the end of five years, global GDP will be 2% higher than would otherwise be the case. The base measure appears to be the current global growth trajectory.
While the word target is misleading, the number of variables involved would make success very hard to measure, such an aspiration is not necessarily a bad thing. Until recently, the global economic focus has been so all-pervadingly negative that any form of economic cooperation has been difficult to achieve. You can see this in the growth of of trade barriers and beggar my neighbour policies. The target does not require countries to do anything grand, simply look at ways of improving their own performance while encouraging greater global cooperation on trade and investment matters.
Of more importance domestically, however, is the interface between the target and Treasurer Hockey's own rhetoric. It is part of the platform he is trying to build to justify proposed changes in fiscal policy and in the role of Australian Governments. Something similar applies to another part of the rhetoric, the comparison between Australia, New Zealand, Canada and, to a lesser extent, the UK.
You can see why if you look at the accompanying graph. The UK may now be growing at around 1.9% per annum, but as the bottom line shows, this downturn has been far worse than its predecessors, recovery far slower. That's hardly a model for Australia to emulate.
Now the rhetoric seems refers mainly to New Zealand and Canada, both countries with Governments ideologically aligned to the current Australian Government. Now we have CANZ (Canada, Australia and New Zealand) as a new grouping. I am not close enough to Canada to make an informed comment on that country's economic performance, beyond noting that it survived the global economic crisis for much the same reasons as Australia, a resource base combined with a relatively transparent and well managed institutional structures. New Zealand is a somewhat different case, although it too had a product in demand, in its case dairy. I think that New Zealand does have lessons to offer,
To a degree, the economic debate in Australia has been clouded by problems of the Abbott Government's own making, as well as the opposition's sometimes inept and short term reactions. This has sucked the oxygen from the public debate. However, the debate has continued behind the scenes, with constant markers in the financial press.
I make this point now because I think that we are entering a period when the debate over economics and ideology is going to be very important. The ground has been laid. I think, too, that the debate has to be fought on facts and analysis. Will this work? What does it mean?
One of the test points here will be the forthcoming Parliamentary session on reduction of red tape. Will this just address business red tape, or will it venture into the social red tape that is now costing the country so much?