http://www.theaustralian.com.au/news/world/g20-leaders-aiming-to-halve-deficits/story-e6frg6so-1225884934498
G20 leaders aiming to halve deficits Brad Norington in Toronto From: The Australian June 28, 2010 12:00AM A protester kicks at a burning police car during an anti-G20 demonstration in Toronto at the weekend. Picture: AP Source: AP THE G20 summit of world leaders in Toronto has agreed to a target of halving budget deficits by 2013. The broad principles set out in a draft communique by the group of world leaders from rich and major developing nations are intended to prevent a repeat of the global financial crisis. According to the draft released yesterday, the leaders have set a target of 2016 for reducing the ratio of government debt to gross domestic product. World leaders at the two-day meeting now accept that nations should be free to tailor their own rules on bank capital requirements or any levies to recoup the costs of bank bailouts. European countries had been pressing for a global bank tax, but others, including Australia, resisted the push. The banks claim tough regulations imposed on their operations across the board could reduce economic growth by 3 per cent worldwide. The G20 leaders have decided to remain vague on the issue. The draft G20 communique recognises that economies are recovering at varying rates after the global meltdown, and leaves nations free to adjust policy according to circumstances. US Treasury Secretary Tim Geithner said: "The scars of this crisis are still with us. We all need to act to strengthen the prospects for growth. This will require different strategies in different countries. We are coming out of this crisis at different speeds." The more flexible approach follows tensions as the US pressed Europe to continue stimulus spending to help countries such as Greece that have spent far outside their means. "There is a risk synchronised fiscal adjustment across several major economies could adversely impact the recovery," the G20 draft said. "There is also a risk the failure to implement consolidation when necessary would undermine confidence and hamper growth." Canadian Prime Minister Stephen Harper, the Toronto host and chairman of the G8 summit in the resort town of Huntsville that preceded the main event, said countries needed a plan to end their stimulus spending. He warned that the threat of another global crisis should spur countries into action. "We must avoid some sort of cataclysmic event," Mr Harper said. China yesterday agreed that the issue of its currency should be on the table for discussion after much criticism from the US and other countries that the yuan is valued too low, giving China an unfair trade advantage. The G8 meeting of the biggest and most powerful countries agreed to set a deadline of five years for Afghanistan President Hamid Karzai to tackle corruption and boost his country's security forces, or face a harsh response. The group, which includes Russia, sought "concrete progress" in what is reportedly a warning to the Afghan leader that military support from the US and its allies is not unconditional or open-ended. The threat posed to international security by Iran and North Korea because of their rogue nuclear programs was also discussed at the forum. The G8 meeting broke no new ground on policies, but agreed to a $US5 billion ($5.7bn) plan for improving maternal and child health in poor countries. After arriving in Toronto for the G20 summit yesterday, leaders attended a working dinner. Australia was represented at the gathering by Deputy Prime Minister Wayne Swan after new Prime Minister Julia Gillard decided to remain at home to focus on domestic issues. It was agreed at the G20 meeting in Pittsburgh last September that this event should become the main forum for pursuing efforts to stabilise the global economy. Former prime minister Kevin Rudd had a role in elevating the status of the G20, but did not last in his job to participate again. The Treasurer said yesterday that the task in Toronto was to strengthen the global financial system by accelerating the repair and reform of the financial sector. "Part of getting the new standards right means ensuring they take into account legitimate country circumstances," Mr Swan said. "There are particular features of markets and institutions that legitimately differ by country, and this means global standards need to be flexible enough to cover these differences." [Non-text portions of this message have been removed]
