The question I have been asked most frequently in overseas discussions about the G20 this year is: whatever happened to Australia's Global Infrastructure Hub?
The global infrastructure investment challenge remains enormous. With G20 Finance Ministers and Central Bank Governors recognising that monetary policy alone cannot lead to balanced growth, tackling investment and infrastructure shortfalls is seen as crucial to lifting growth, job creation and productivity.
Unsurprisingly, investment has been a key focus of both the 2014 Australian and 2015 Turkish presidencies. About a quarter of the G20's comprehensive growth strategies are investment pledges and each G20 country is now preparing an investment strategy that their leader will deliver in Antalya. Last September, during Australia's G20 presidency, finance ministers also committed to a multi-year Global Infrastructure Initiative to increase quality investment by developing a knowledge-sharing platform which addresses data gaps and develops a consolidated database of infrastructure projects connected to national databases.
But beyond rhetorical statements and carefully crafted plans, the G20 has so far struggled to convince that it can deliver solutions.
The Global Infrastructure Hub has attracted a lot of attention because it has the potential to be an antithesis to these 'all talk but no action' critiques of the G20. It is a rare instance where G20 leaders have created a bricks-and-mortar multilateral institution (the only other two examples being the Financial Stability Board, once described by then-US Treasury secretary Tim Geithner as 'in effect, a fourth pillar to the architecture of cooperation we established after the Second World War', and the Agriculture Market Information System). It is also Australia's first attempt at hosting a multilateral initiative, in Sydney no less.
However, as Hugh Jorgensen and I noted when the Hub was announced, there have been concerns about lack of clarity around the role for the Hub in what is a crowded space, whether it would set a dangerous precedent of G20 institution-building, and how significant a contribution the Hub can make to investment over four years.
This suspicion remained as long as details remained elusive. But a shift has occurred in the past month. First, the website was updated with a range of background material. And a business plan was endorsed by Finance Ministers in Ankara earlier this month which gives us a better idea of the Hub's role:
- Knowledge network: the Hub will develop an online information source of currently-financed infrastructure programs, collect best practice materials, and draw together a loose network of academics and professionals.
- Data gaps: the Hub will propose a standard set of operational data to be collected on new projects, with the OECD also proposing a research agenda for data gaps in long-term investment.
- Project database: the Hub will work with existing providers (such as the International Infrastructure Support System) to find the best possible project pipeline in a single, open source database.
- Quality of projects: the Hub will develop and promote voluntary codes on procuring quality infrastructure.
- Capacity building: the Hub will act as a convening body between public and private sectors to promote successful actions.
So the Hub has marked itself more as a 'coordinator' first and on-the-ground agency responsible for filling in gaps second. The Hub will not to advise on, or finance, specific projects, in a marked difference from the World Bank's Global Infrastructure Facility. Instead, its role is more 'big picture'., with the aim of bringing a cohesive governance structure to international efforts to lift infrastructure investment. The vision is to bring together a disparate group of organisations and relevant information in the field of infrastructure in the pursuit of improving efficiency, filling gaps and contributing to growth. It has the advantage of a G20 mandate, and has a memorandum of understanding with both the World Bank and OECD.
There is also now a much better sense of the scale of its operations. The Hub will be an independent, not-for-profit body with an overall budget over four years of A$50 million, with A$30 million from Australia and the remaining A$20 million from five G20 members — China, Mexico, Korea, Saudi Arabia, and the UK — as well as the two invited guests of Australia's G20 presidency, New Zealand and Singapore. Staffing is still skeletal, but will double in the coming months as a permanent office is established, and will eventually reach 20 people.
At this stage, the Hub remains an experiment. The only likely deliverable in 2015 is the business plan. However, we should not scoff at what has been achieved so far. As those developing the other new kids on the infrastructure financing block (the AIIB and BRICS New Development Bank) have quickly learned, multilateral institutions take time to set up. It is important to get the right people in key positions.
Ultimately, the Hub will be judged on what it delivers over the next three years. But at a time when the G20 needs to demonstrate that it is delivering outcomes, the Hub still carries the potential to contribute to real improvements in the coming years to global investment financing, and give a compelling reason for an extended mandate. Momentum is beginning to build.
Photo by Flickr user Jeffrey Scism.