British Prime Minister Boris Johnson has invited Australia, along with India and South Korea, to attend this year’s prestigious Group of Seven Leaders’ Summit in June. This is a rare opportunity for Australia to contribute to policy discussions with the largest advanced economies in the world (United States, United Kingdom, Canada, France, Germany, Italy and Japan). So what will Australia bring to the G7 table?
Australia would be expected to be a prominent contributor to G7 talks on China, especially in regard to trade flows, disputes and China’s increasing influence in the Asia-Pacific. Australia’s management of COVID-19 – both in health and economic terms – is generally well regarded internationally, so Australia would also be expected to share views on the roadmap for recovery, and specifically how advanced economies can transition from a period of heavy stimulus to private sector-led growth.
But I would like to see Australia bring something different – and perhaps unexpected – to the G7 table: a focus not on advanced economies but on those developing and least developed economies that are least able to absorb the economic shocks from COVID-19.
Developing countries are expected to lose more than US$220 billion in income because of COVID-19. This is especially devastating for the one in two people worldwide who have no access to welfare or social protection.
The World Bank projects that the knock-on effects of COVID-19 will plunge 150 million into extreme poverty by the end of 2021 – increasing global poverty for the first time in 22 years. According to the World Investment Report, foreign direct investment to developing economies was estimated to have declined by 15-45% in 2020.
It is a similar story for remittance flows. The World Bank predicts that remittances, a lifeline for many living in extreme poverty, will shrink by 14% in 2021. In Australia’s immediate region – the Pacific – the Lowy Institute forecasts that average incomes will not recover until 2028, warning of a ‘Pacific lost decade’.
The G7 is primarily an economic grouping, not a development one, so why should G7 governments care about supporting the poorest through this crisis? Because it is smart economics, and the right thing to do.
The global economy cannot recover if developing economies are left behind. One study by the US National Bureau of Economic Research found that a failure to distribute the COVID-19 vaccine to developing countries will lead to substantial losses for advanced economies.
In the most likely scenario, where people in advanced economies are fully vaccinated this year and only half of those in developing countries are vaccinated, the global economy would suffer losses of between US$1.8 trillion and US$3.8 trillion. More than half of these costs would be borne by advanced economies due to the interconnectedness of trade.
In a worst-case scenario where vaccines do not reach developing countries at all, the global economy would suffer losses exceeding US$9 trillion. This is more than the economies of the UK, Germany and India combined.
So, to revisit our original question, Australia should bring two issues to the G7 table.
First, Australia should advocate for vaccine equity.
Widespread distribution and take-up of the COVID-19 vaccine – in rich and poor countries alike – is a prerequisite for economic recovery. As of mid-January, high-income countries held 60% of the available vaccines despite only being home to 16% of the world’s population.
It is estimated that about 85 countries will not have widespread COVID-19 vaccine coverage until 2023. This is too little, too late. Australia can advocate for vaccine equity from a place of authenticity having contributed $80 million to the COVAX Facility, $500 million for the vaccine rollout in South-East Asia and the Pacific, and most recently diverting 1.8 million of its own vaccine doses to address the outbreak in Papua New Guinea.
Just as the Quad (an alliance comprised of Australia, India, Japan and the US) recently made commitments to expand vaccine access in the Indo-Pacific region, G7 governments should work together to scale-up global vaccine production and fund ‘last mile’ distribution across developing economies so no country is left behind.
Secondly, Australia should advocate for G7 governments to support an inclusive economic recovery, especially through development aid and debt relief.
Official Development Assistance can be a catalytic resource for economic recovery in poor nations – increasing access to finance, supporting micro, small and medium-sized businesses to rebuild, revitalising dormant markets and supporting job creation, especially for women. World Vision knows the tremendous impact of inclusive economic development first hand.
The OECD calculates that if donor governments were to maintain their 2019 ODA-GNI ratios, then total ODA could decline by US$11-14 billion due to the collapse in national incomes across the world. Some G7 governments, such as the UK, have not even maintained their ODA ratios, opting to cut aid in the face of domestic economic pressures despite a resurgence in global poverty.
Australia, on the other hand, has increased aid spending, albeit slightly, for the first time since 2013. Economic recovery is now one of three pillars of Australia’s new development policy, Partnerships for Recovery.
Building on these achievements, it would be great to see Australia secure a commitment from G7 governments to (1) at least maintain current levels of ODA and (2) to intentionally deploy ODA to support an inclusive economic recovery that reduces inequality rather than worsening it. Debt relief or cancellation is another way that G7 governments can support the recovery, enabling developing economies to invest more of their scarce financial resources in important services like health, education and economic recovery instead of servicing loans.
If the pandemic has taught us anything, it is that our economic, social and health systems are deeply interconnected, and so too is our recovery. We cannot afford to leave developing and least developing economies behind.
The G7 has played an important development role in the past: the 1996 summit helped launch the world’s signature debt relief initiative; the 2000 summit led to the establishment of the multi-billion-dollar Global Fund to Fight AIDS, Tuberculosis and Malaria; and in 2019 G7 governments committed to combatting inequality through a renewed partnership with Africa.
Australia and the G7 have an opportunity build on this track record and adopt a global perspective in this year’s summit to lead an inclusive economic recovery not only for their own nations, but for the world.
This article appeared first on Devpolicy Blog (devpolicy.org), from the Development Policy Centre at The Australian National University.
Dane Moores is the Policy Manager at World Vision Australia where he oversees policy analysis and influencing on child rights, livelihoods and food security, conflict and fragility, and First Nations policy.
Were you one of the many Pacific Islanders who spent the first few weeks of the coronavirus pandemic with soil under your nails? The introduction of lockdowns plus border closures precipitated an explosion of backyard gardening across the region last year, as people had more time on their hands and looked to feed their families and supplement incomes.
For a few weeks early in pandemic, vegetable seeds were almost impossible to come by in stores, and there were long lines for free seeds outside the Ministry of Agriculture office in Suva, Fiji. In Honiara, the Kastom Gaden Association’s Model Farm was busy. “We’ve received more than 900 visitors requesting for seeds, seedlings and information between October and November last year,” Pitakia Tikai of Kastom Gaden Association told Solomon Islands media. And the Guam Plant and Seed Share website, which has been quietly operating since 2011, saw a doubling of its membership when Guam went into lockdown.
Nishi Minoru of Tonga’s Nishi Trading said of these novice planters: “Some of them have never grown anything in their life but they’re all growing, and they’re excited about that. But the challenge with this is that when this all comes to maturity is finding the market for them, and I think this is where value adding opportunity for Tonga is to look at processing some of the stuff. The challenge there then is infrastructure. This is where I think development partners can come to the table.”
“I see a risk in that there is no real overarching policy for the whole country,” Nishi continues. “We need a 50 year roadmap.”
The pandemic also saw many people, suddenly jobless in urban or tourist centres, return to their village, something sugarcane farmer Ratu Livai Tora and chairman of Fiji’s Nature’s Way Cooperative told the Reset Fiji program, had caused disputes over land.
While people were planting at a domestic level, experienced larger scale farmers have urged governments, donors and national planners to reprioritise support for agriculture in recognition of its importance to food security, economic growth and physical health and well-being.
“Whilst the current COVID-19 situation remains dire, there are major opportunities within the agricultural sector to boost the Pacific economy,” the Pacific Islands Farmers Organisations Network (PIFON) said.
“Agriculture has all too often played second fiddle” wrote the authors of PIFON’s survey, COVID 19 & Agriculture: Pacific farmers have their say.
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The most senior civil servant in Fiji’s Ministry of Economy, Makereta Konrote, has resigned from the post.
Konrote’s resignation comes at a critical time, as Fiji’s Minister of Economy remains in Singapore for medical treatment, and economic activity continues to take a battering from COVID-19 related border closures and Tropical Cyclones Yasa and Ana.
Minister Aiyaz Sayed-Khaiyum has been conducting budget consultation sessions over the Internet from Singapore, with the budget due to be delivered mid-year.
The February economic updated released by the Reserve Bank of Fiji this week stated declines in visitor arrivals (-98.5%), electricity (-13.7%) and mahogany (-98.7%), although there were production increases for cement, gold, pine, woodchips and sawn timber.
The Reserve Bank says Value Added Tax (VAT) collections plummeted by 25.2% and new lending by commercial banks for consumption purposes fell by 39.3%. Commercial banks’ new lending for investment declined by 47.2% in January.
The Bank says labour demand remains week, with job vacancies falling by 82.6% in January.
Government recorded a net deficit of $545.8 million (or 5.5% of GDP) in the first six months of the 2020-21 financial year. At the end of January 2021, government debt stood at 73.2% of GDP. 19% of this was external debt.
A government statement today quoted Konrote, who has been at the Ministry for 18 years and PS for five, as saying: "It has been a great privilege to work on behalf of my country. I want young people, particularly young women, who are considering entering the Civil Service to know that it can be a deeply fulfilling career of service to your fellow Fijians."
"I'm confident that I'm leaving the Ministry in the good hands of dedicated Fijians who are firmly focussed on our recovery from the COVID-19 pandemic."
Shiri Gounder, the Head of Fiscal Policy and former Head of Treasury will act as the Permanent Secretary for Economy from 16 March 2020.
Fiji’s Minister for Economy says there will no civil service pay cuts. Speaking from Singapore during an online budget consultation, Aiyaz Sayed-Khaiyum said the government’s wage bill is $1.1 billion (US$500 million) and the sector employs some 30,000 people.
Fiji’s Minister for Trade, Commerce and Tourism, Faiyaz Koya says the newly launched Pasifika Heartbeat app is “a great example of how Fijians are exploring opportunities to make information services available to Fijians.”
“The health and medical services has become a leading sector where technology is playing a very important role - with the use of telemedicine and other app services. In fact, the pandemic has sped the digital transformation of healthcare. It has also boosted innovation in how patients can receive and consume health care services,” Koya said.
The Pasifika Heartbeat app is a digital repository of health-related information, including the geo-location of public and private health clinics, pharmacies, and hospitals.
Investment Fiji has launched its new Fiji Trade Expo Series, with the first expo focused on marketing Fiji’s premium products to New Zealand, Fiji’s third largest export destination for merchandise trade. Other expos in the series will target Australia, USA, India, Europe, China, Japan, Indonesia and UAE. Fiji’s top exports to New Zealand are dalo, medicaments, garments, kava and fresh vegetables. New Zealand is also Fiji’s 3rd largest source of foreign direct investment in terms of both number and value of projects.
Research undertaken by the World Bank Group concludes removing non-tariff trade barriers could help countries maximise gains for women-owned businesses in the Pacific Islands, Papua New Guinea and Timor-Leste. Targeted policies – aimed, for example, at promoting paperless and automated custom systems – could help maximise the benefits of trade for women, who currently face greater challenges than men, the World Bank says.
About 1,500 cross-border trading firms took part in the survey, which showed that women-led firms experience greater obstacles. Fewer women are represented in trade associations and they are consulted less regularly when it comes to matters related to border processes. Women are also dependent on more flexibility in doing business due to more family obligations.
The Acting Permanent Secretary for Local Government, Shaheen Ali says approximately $30 million has been given as concessional loans to 5,438 micro, small and medium enterprises as part of government’s COVID-19 relief efforts. These loans have been extended mainly in the agriculture, wholesale and retail, food and hospitality, transportation, manufacturing and other service driven sectors.
A number of Fijian businesses continue to sign under the Fijian Grown logo. One of the latest is farm and floriculture outfit, Golden Cowrie Complex.
Twelve Pacific Island countries are expected to receive vaccines for the coronavirus in the first half of this year through the COVAX initiative, with the region’s largest nation Papua New Guinea expected to receive by far the largest allocation.
PNG—which is still experiencing large-scale community transmission of COVID-19— is forecast to receive 684,000 doses of the AstraZeneca vaccine manufactured at the Serum Institute of India in the first quarter of the year. Solomon Islands will receive 108,000 doses from the same source.
The other Pacific Islands nations listed by COVAX last week will also receive the AstraZeneca vaccine, but from a different manufacturing source.
While these forecasts are subject to change, COVAX partners say the release of this information should help governments and public health leaders put into place practical steps to roll out the vaccines in-country.
The Facility aims to see total doses cover at least 3% of the total population of all 145 participant countries in the first half of this year, enough to protect the most vulnerable groups such health care workers.
While 1.2 million doses of the Pfizer-BioNTech vaccine will be available to the COVAX facility in the first three months of this year, no Pacific Islands are listed to receive it as this is the ultra-cold chain vaccine, requiring temperatures of minus-70 degrees.
More vaccine doses are expected to be available later this year.
After last week's Pacific Islands Forum Special Leaders' retreat, Secretary General Dame Meg Taylor said Australia and New Zealand have committed to ensuring vaccines will be shared across the region.
"They gave assurances to the leaders that supplies would come. However in terms of an exact date I would be misleading you if I said we had any clear indication of that."
In a speech in Fiji’s parliament today, Attorney General Aiyaz Sayed Khaiyum said vaccine dispersal is so far “shaping up to be a rich countries’ race. Countries with just 16% of the world’s population have bought out 60% of the world’s vaccine supply.”
“Fiji must secure its place in the world’s economic comeback by securing vaccines as quickly as we can, not months after the rest of the world but alongside it otherwise our people will be more vulnerable than they have ever been, exposed to infection, economically disadvantaged and left behind as the rest of the world races ahead.”
“Patiently waiting our time in the COVAX queue will be economic suicide for the country,” he said, noting that Fiji is working with bilateral partners to secure financial resources to buy vaccines now and will also be looking at making direct purchases from vaccine manufacturers.
“So far Australia and India have stepped up with direct funding and shifted support,” Khaiyum said.
This story was updated at 5:11pm Fiji time to reflect events in Fiji's parliament today.