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C20 Governance Working Group: background paper

C20 Secretariat
on Fri, January 31, 2014 at 03.28 am
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The C20 Governance Working Group will develop recommendations for the G20 to support economic growth and resilience through effective and transparent institutions. Corruption, loopholes created by outdated legislation and opacity in how decisions are made facilitate the syphoning off of public funds, inefficient investments, a lack of trust in governance and economic instability.

Anti-Corruption

Key problem to be solved: Corruption negatively impacts economic growth by distorting bidding processes, creating uneven playing fields and damaging the credibility and reputation of governments and companies. Corruption also leads to inequalities such as access to health, education and professional opportunities. Global Financial Integrity’s 2013 Report on Illicit Financial Flows found that crime, corruption and tax evasion resulted in USD 946.7 billion flowing from the developing world in 2011. Cumulatively between 2002 and 2011 the report suggests that illicit financial outflows from developing nations totalled USD 5.9 trillion. The resulting loss of tax revenues entrenches poverty and weakens developing country economies.

Current G20 position: The G20 leaders in St Petersburg recognised ‘corruption is a severe impediment to sustainable economic growth and poverty reduction and can threaten financial stability and the economy as a whole’. The Leaders endorsed the St Petersburg Framework, making the Anti-Corruption Working Group a permanent Working Group of the G20, and made available an Issues Paper on Corruption and Economic Growth1
 prepared for the G20 Anti-Corruption Working Group. The current G20 Anti-Corruption Action Plan ends in 2014 but many commitments by governments have not yet been implemented.

C20 position: Effective Anti-Corruption measures can increase economic growth by building trust and transparency, creating a sound environment for investment, trade and employment. Many financial institutions—not only in offshore financial centres, but also in G20 countries—remain safe havens for all types of illicit money, generated by corruption, tax evasion and other forms of criminality.2
 
Potential solutions for the G20 to adopt in 2014:

  • Fulfilment of Anti-Corruption Action Plan commitments on whistle-blower protection legislation in public and private sectors, stolen asset recovery and denial of entry to corrupt officials within G20 countries.
  • Practical steps towards tackling money laundering and illicit financial flows, including G20 members legislating and implementing public registers of beneficial ownership of companies and trusts. 
  • Transparency in the Extractive Industries – G20 members work towards establishing a global standard for the mandatory reporting of payments by extractive industry companies to governments and there is wider G20 commitment to implement the EITI aG20 Leaders endorse a specific forward- looking 2015-16 Action Plan that is tangible and actionable.

 
Tax Transparency

Key problem to be solved: Estimates suggest developing countries lose an estimated $100bn to $160bn of tax revenues annually to tax avoidance and tax evasion. The off-shore financial system of tax havens, anonymous shell companies and other trade-based money laundering techniques facilitate the illicit flow of capital throughout the world, to, from and between developing and developed economies and entities.

Current G20 position: The 2013 G8 Summit, chaired by the UK, pushed for greater transparency about tax. This was followed up at the G20 St Petersburg Summit where members instructed the OECD to develop plans for a system to automatically exchange information between tax authorities. This is to commence in 2015, and the standard, and the data release associated with it, will be key issues for implementation.
C20 position: G20 Members should deliver specific, time-bound commitments to increase transparency in the international financial system, while enabling developing countries to reap the benefit from 1) the automatic exchange of tax information; and 2) reforming customs and trade protocols to detect and curtail trade mis-pricing; and 3) progress towards full country by country reporting.
 
Potential solutions for G20 to adopt in 2014:

  • Automatic information exchange between tax authorities that makes sure developing countries can use and benefit from the system.
  • Country-by-country reporting by all MNEs disclosing revenue, profit, assets, taxes paid and employees in each jurisdiction the company operates in.
  • Public disclosure of ultimate beneficial ownership.

Open Government and Open Data

Key problem to be solved: Lack of transparency in government erodes trust in public institutions, undermining civic and economic growth. Lack of transparency also prevents citizens from holding decision-makers to account for the effective and legitimate use of public money.

Current G20 position: At the 2013 G8 Summit the UK announced its commitment to the G8 Open Data Charter and in November the UK hosted a meeting of the partners in the Open Government Partnership. Each of these initiatives provide underlying support for greater transparency which will strengthen efforts to combat anti-corruption and money laundering, end illicit financial flows and counter tax evasion and avoidance. There is as yet no concerted G20 action on the issue.

C20 position: Lack of transparency in the public sector fuels citizen mistrust and can lead to political instability and misallocation of scarce public resources to the benefit of the few at the expense of the many.3
 
Potential solutions for G20 to adopt in 2014:

  • G20 Leaders adopt open data exchange protocols, notably those related to corporate entity registration, financial transactions and trade reporting

 
1 See http://www.oecd.org/g20/topics/anti-corruption/Issue-Paper-Corruption-and-Economic-Growth.pdf
2 Civil20 Working Groups’ Recommendations to the G20, p.51 
3 Ibid, p.55

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World We Want 2015
Thu, May 15, 2014 at 07.02 pm
Corruption is a virus that is killing our nation's future.From Top level Government Member to grassroots members of Government administrative teams are corrupted in Bangladesh. Their are no transparency in government cost management and financing. We will suffer massive loss in very near future when our economy will collapse and that's obvious going to happen in Bangladesh. Running a country is not a matter of jokes.
Where "Politics" used as a money making mechanism? What a general public of the country will raise his voice against corruption. I am pledging to the All Other Governments who has been taking into account to root our corruption. Bangladesh is a country that has many potential economic future. We have millions of skilled and unskilled labors who can contribute Billions of USD per year to our economy. But nobody from Government sides are thinking about this matters to run our country smoothly.
Key problems of Bangladesh are :
1. Corruption
2. Bribery
3. Non Transparency
4. Lack of Good Governance system
5. Education
6. Unemployment
7. Massive Drug Abusing
8. Health care system
9. Generation Gap will come very soon where we are not ready to solve this problems
10. Human Rights violation and Labor policy

We would like to see our country Bangladesh as a raising economy, if the government and opposition parties came together and have mutual understanding to solve the political crisis and we should have a free, fair and credible national Election which will be considered that peoples of Bangladesh can put their vote to their chosen party without any enforcement. In our last 10th National election only 5% vote has been cast. Even on the election pole my vote already has been given by someone else. What we can expect from a Government who came to power abusing Human Rights,manipulating Constitution so that they can remain in power.
Philip Geoffrey Jones High School Teacher
Tue, March 4, 2014 at 11.11 pm
This background paper refers to "sustainable economic growth". There is a respectable group of people who would see this as an oxymoron, simply because we cannot have unlimited growth on a finite planet.
While theorists can argue that we either can or have to have unending economic growth, in practice, economic growth brings with it increased consumption of resources, increased waste, and more frequently these days, conflict between resource harvesters and local inhabitants.
I believe this paper should acknowledge the limits to growth, call for the transition to the Steady State Economy and challenge the G20 to begin plans to transition to the Steady State Economy.
While the presently developing UN Sustainable Development Goals and those of the C20 (as implied through the background papers), are in line with the Steady State Economy, neither reflect the required dialogue between ecologists and economists. For example, development of Coal Seam Gas reserves is a reflection of economic growth and improvement in employment opportunities on the one hand, but environmentally very controversial. Of course, examples like this are familiar to us all and are extremely numerous.
Pointing out the necessity of transitioning to a steady state economy as a need, rather than focussing on the growth economy, recognises the heart of the problem, thereby enabling us to treat the cause and not just the symptoms of the integrated problems we face. We can develop a common goal, sense of purpose and move forward in a united way.
This is extremely important when we look at the issue of employment. The solving youth (as well as general levels of) unemployment by "growing" the economy is the traditional solution, the Steady State Economy solution is by ensuring all have (at least) part time work or share income earning positions. The former solution is widely accepted, the latter requires a great deal of dialogue and the acceptance of the fact that the traditional solution is not the the long term solution and carries with it the prospect of disaster, i.e. economic collapse.
I do hope the C20 is flexible enough and strong enough in their dialogue with the G20 to challenge them to a new way of thinking.
Philip Geoffrey Jones High School Teacher
Tue, March 4, 2014 at 11.11 pm
This background paper refers to "sustainable economic growth". There is a respectable group of people who would see this as an oxymoron, simply because we cannot have unlimited growth on a finite planet.
While theorists can argue that we either can or have to have unending economic growth, in practice, economic growth brings with it increased consumption of resources, increased waste, and more frequently these days, conflict between resource harvesters and local inhabitants.
I believe this paper should acknowledge the limits to growth, call for the transition to the Steady State Economy and challenge the G20 to begin plans to transition to the Steady State Economy.
While the presently developing UN Sustainable Development Goals and those of the C20 (as implied through the background papers), are in line with the Steady State Economy, neither reflect the required dialogue between ecologists and economists. For example, development of Coal Seam Gas reserves is a reflection of economic growth and improvement in employment opportunities on the one hand, but environmentally very controversial. Of course, examples like this are familiar to us all and are extremely numerous.
Pointing out the necessity of transitioning to a steady state economy as a need, rather than focussing on the growth economy, recognises the heart of the problem, thereby enabling us to treat the cause and not just the symptoms of the integrated problems we face. We can develop a common goal, sense of purpose and move forward in a united way.
This is extremely important when we look at the issue of employment. The solving youth (as well as general levels of) unemployment by "growing" the economy is the traditional solution, the Steady State Economy solution is by ensuring all have (at least) part time work or share income earning positions. The former solution is widely accepted, the latter requires a great deal of dialogue and the acceptance of the fact that the traditional solution is not the the long term solution and carries with it the prospect of disaster, i.e. economic collapse.
I do hope the C20 is flexible enough and strong enough in their dialogue with the G20 to challenge them to a new way of thinking.
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