Purpose
The Treasury seeks to secure the benefits of global economic integration. The Treasury will continue to balance opportunities and risks in relation to trade and investment flows through our understanding of Australia's place in a complex global economic context.
The Treasury's ongoing program of international engagement is central in building capacity in Australia's region, assisting in monitoring international developments and promoting regional and global macroeconomic stability.
Environment
Risks to the global outlook have broadened, with concerns about slowing activity in emerging market economies as well as lower potential growth in advanced economies. Of particular significance for Australia are the implications of the transition of the Chinese economy towards a more balanced, consumer-driven growth model, which provides both challenges and opportunities.
A number of major economies continue to face financial challenges, particularly the euro area, Japan and a range of emerging market economies. Concerns about continued low inflation globally are also growing, which partly reflects the impact of low energy costs.
Overall, Australia's major trading partners are expected to grow faster than the global economy overall. Emerging Asia remains the region showing the strongest growth and Australia remains well-placed to expand exports and investment into the region.
A strong financial system is important for sustaining a resilient and growing economy. The opening of the financial system to international participants dramatically improved access to and competition in the provision of financial services. Sound regulatory frameworks helped Australia weather the global financial crisis better than our international peers.
The Treasury monitors the global economic environment closely. It works closely with other countries bilaterally, in international fora and through international institutions such as the International Monetary Fund (IMF) and World Bank to monitor economic trends and manage risks as they emerge. It advises the Government on conditions such as changing commodity prices, inflation, monetary and fiscal policy trends, the global financial safety net, financial market resilience, economic transitions and demographic challenges, and assesses how changes may affect the domestic economy. In progressing Australia's economic interests, we work to promote our domestic reforms in the international arena, with the aim of contributing to improving the international economic outlook.
Capability
The Treasury manages Australia's bilateral and multilateral economic relationships, through its relationships with other countries, connections in multilateral forums such as the G20 and APEC, and its relationships with the international financial institutions. The Treasury has officers deployed into key markets who provide reporting that is an essential input into our advice to the Government.
The Treasury assists the Government to advance Australia's economic interests in the G20. Given the continued uncertain global environment, Australia's engagement with other G20 economies and support for the G20's reform agenda over the next four years will be targeted toward boosting global growth and enhancing financial stability.
Over the coming years, Australia's agenda includes supporting the ambition to lift collective G20 GDP, actively engaging with the Global Infrastructure Hub (the Hub) on increasing global infrastructure investment, encouraging widespread implementation of tax reforms to address base erosion and profit shifting, and strengthening the international financial architecture. We have a similar agenda in APEC, where we work with other economies on areas of mutual interest, particularly infrastructure and international taxation.
The Treasury engages closely with the international financial institutions (IFIs) as key elements of the international financial architecture to ensure they are effective in supporting growth, stability and economic development. Through engagement, the Treasury influences the activities of IFIs in the region, and encourages responsiveness to the overarching global economic agenda. We also have officers directly involved in decision-making at these institutions by virtue of our Board positions.
The Australian Government's engagement with the IMF, World Bank and Asian Development Bank is underpinned by domestic legislation.
Over the coming four years, the Treasury will continue to advocate for reform to IMF quotas and governance to ensure the IMF remains credible and effective. It will also work to ensure the effective operation of the global financial safety net, including by encouraging closer cooperation between the IMF and regional financing arrangements, and the continued evolution of the IMF's lending toolkit. The Treasury will also support constructive engagement between the IFIs, the G20 and the Hub.
Over the next few years, the Treasury will also encourage the Multilateral Development Banks (MDBs) to support economic reform and prioritise increased and better targeted investment in infrastructure, including through catalysing additional private sector investment, and by optimising their use of capital.
Through Australia's foundation membership of the Asian Infrastructure Investment Bank (AIIB), the Treasury will continue to help strengthen China's commitment to effective multilateralism aimed at increasing infrastructure investment in the region.
To support increased regional growth and stability, the Treasury will deepen its bilateral engagement with key strategic partners in the Asia-Pacific-Indian Ocean region, including by placing a greater focus on our analysis of emerging economies. This will build on our existing strong relationships with advanced economies. In providing advice to the Government on expenditure in the defence and security portfolios, we also contribute to ensuring that Australia is appropriately resourced to tackle issues such as counter-terrorism, transnational crime and border security.
Performance
In assessing its influence in shaping the international economic agenda, the Treasury will measure performance through a broad qualitative indicator of policy activities and assess its influence through annual stakeholder surveys. Consistent with the need to manage money appropriately, the Treasury will aim for 100 per cent accuracy in payments to international financial institutions.
| Measure | Assessment | Period |
|---|---|---|
| Through bilateral relationships, involvement in multilateral fora and relationships with IFIs, including MDBs, the Treasury will contribute to shaping outcomes that further Australia's economic and strategic interests. | Stakeholder surveys, including of other Government departments, other countries, IFIs, MDBs | Annual surveys of different stakeholders. |
| Payments to international financial institutions are made accurately and in good time with due regard to minimising cost and risk for Australia. | The target is 100 per cent of transactions are timely and accurate. | Assessment will be annual |