SYDNEY, Aug. 19 (Xinhua) -- With host Australia ramping up the final preparations for November's Brisbane G20 Summit, a leading economic think tank delivered a shopping list of demands in an overarching report on Tuesday, with multinational profit shifting top of an agenda eclipsed by questions over Russia's attendance.
The Committee for Economic Development of Australia (CEDA) said Australia must act on taxation and financial sector reform to ensure a crackdown on profit shifting by multinationals and to stave-off a repeat of the global financial crisis.
CEDA Chief Executive Professor Stephen Martin said the report, Australia's Brisbane Summit challenge: Securing G20's future, backed the G20 as long as the summit could retain focus on outcomes.
"Our report has found that despite suggestions to the contrary, the G20 absolutely still has a role to play in tackling major economic challenges," Professor Martin said.
"However, the CEDA report also highlights it is vital that issues such as financial system regulation and taxation reform where substantial progress through the G20 has been achieved already must be addressed with renewed rigor following the Brisbane Summit," the CEDA chief executive said.
At February's Sydney G20 finance ministers and central bank governors meeting, the slow-burn, multi-polar battle against cross- border tax evasion received a promising nudge when leaders signed off on a "global standard for the worldwide automatic exchange of tax information".
Australian Treasurer Joe Hockey described the new global standard as a significant enhancer of international tax transparency that he hoped would reduce the instances of corporate evasion.
CEDA said that financial system regulation reforms pursued by the G20 following the global financial crisis have been strong but "largely reactionary".
The next step in these reforms is to address the root cause of financial crises and to put policies in place to deal with them, CEDA believed.
"The tax reform agenda also needs to be expanded to become bolder with a clear emphasis on tackling tax avoidance through policies that stop profit shifting, increasing transparency, and by being applied more comprehensively to emerging economies," Professor Martin said.
According to Australia's lead G20 financial official Barry Sterland, technology in a globalized business environment has radically altered multinational tax structures, placing enormous pressures on both domestic and international tax systems.
"This has increasingly provided opportunities for companies to exploit gaps in a weakened system to reduce or avoid their tax obligations and shift the burden to others," Sterland said during a May G20 taxation conference.
While Australia has sought to make international tax reform a priority of its G20 leadership which comes to an end in November this year, there is a clear and present danger to the spread of multinational "loopholing", the shifting of profit bases across national borders to minimize tax impacts.
According to Sterland, the G20, in cahoots with the Organization for Economic Cooperation and Development (OECD), needs to haul global tax systems - kicking and screaming if need be - into the new century.
"This will have broad-reaching implications for all countries," he said.
However, Australia's Presidency is already in danger of utter distraction, with all eyes firmly fixed on the Kremlin and whether Russian President Vladimir Putin will attend the all important the G20 summit in Brisbane.
Speaking in Sydney last week, U.S. Secretary of State John Kerry told reporters that Putin's ticket will depend on "how he responds to the Ukraine crisis in the coming weeks".
Following the Malaysian flight MH17 disaster and intensified fighting in the Ukraine, Kerry said no decision had been made on just how welcome Russia will be at the G20 summit which will kick off in November.
"A lot of the attitudes about that issue from the various countries attending can be determined and impacted to some degree on what happens in these next days and weeks,' he said.
Martin said he hoped the drama would not steal the focus of the leaders meeting.
"While issues such as Russia's participation in the Summit are critical, it is important that the focus on key economic reforms is not overshadowed or lost."
The message from CEDA is that the world economy is still fragile, particularly with respect to global finance, and the focus for the summit must concentrate on what policy decisions and actions need to be considered to mitigate against another potential global financial crisis.
"The impact of the global financial crisis is still being felt in the world economy and while Australia was insulated from its worst effects by the mining boom, it is unlikely we would have the same buffer if another occurred," he said.
Professor Martin said it was very disappointing that other key issues such as climate change, particularly the economic consequences as identified in a previous CEDA report and by world leaders, are currently not on the agenda.
"As the host of the G20 Brisbane Summit, Australia has a unique opportunity, in fact a duty, to make sure that the forum is more than a 'talkfest', and that key issues with significance for both our own economy and globally are tackled effectively," he said.
"Australia is spending a significant amount, suggested as being almost half a billion dollars, as host of the G20 this year."
"However, if the reforms proposed through a robust agenda are enacted, there is potential for a much larger economic payoff, many times this amount for the global economy which will of course flow through to Australia."
"The central issue is making sure this potential is realized."
CEDA is a national, independent, member-based organization providing thought leadership and policy perspectives on the economic and social issues affecting Australia.