Global business leaders push for infrastructure funding overhaul

By Jane Wardell

SYDNEY (Reuters) - International business leaders are lobbying the Group of 20 bloc of advanced and developing countries to tackle a $57 trillion shortfall in global infrastructure, pressing for changes to funding rules they say would help big projects move ahead.

The Business 20 Group, which is holding a summit in Sydney this week, criticized cumbersome global rules that make it hard for large pension funds and insurance companies to invest in major infrastructure projects.

Relaxing those rules and smoothing out approval and procurement processes that, in some countries, can result in a project taking 10 years to get the green light will be critical if the G20 is to meet its ambitious growth targets, B20 leaders said.

"Infrastructure investment is one of those critical levers you can pull that can drive into economic growth relatively quickly," said David Thodey, Telstra Corp Ltd chief executive and spokesman for the G20 on infrastructure issues.

The B20, set up in 2010 to give policy recommendations on behalf of the international business community to the G20, has estimated that at least $57 trillion will be needed to finance infrastructure projects worldwide through 2030 to meet the demands of global economic growth.

Despite that, Thodey said, there was no priority list of global infrastructure projects, making it difficult for potential investors to know where to start.

G20 finance ministers agreed in Sydney in February to draw up "real and effective plans to lift the global economy" by more than 2 percent "above the trajectory implied by current policies" over five years. They meet again in Australia in September.

Australian Treasurer Joe Hockey has criticized progress towards the 2 percent goal as too slow. "Some countries like China and increasingly Germany have been very supportive of our goals, but there's more to be done," he told ABC radio.

Australia and New Zealand Banking Group CEO Michael Smith said one big problem was excessively tight financial regulation imposed in the wake of the global financial crisis.

"We've heard the feedback from market participants that regulation is unintentionally restricting financial inclusion, deterring infrastructure investment and limiting the provision of trade finance," said Smith, spokesman for a B20 task force on financing growth.

"I'm not pre-empting things by saying that the task force wants the G20 to pause, take stock and align global regulation."

Tackling the infrastructure deficit is one of four areas the B20 says is critical to meeting the growth goal, alongside financing growth, slashing unemployment and boosting investment and trade.

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Australia is the host of this year's G20 meetings, a fact that B20 sherpa Robert Milliner said gave credibility to the talks, given Australia's record two decades of unbroken growth.

PROFIT SHIFTING

One issue that won't be on the table at the B20 talks is corporate "profit shifting", which costs governments up to $3 trillion a year, according to researchers from Tax Justice Network.

G20 finance ministers agreed in February to develop stricter rules on cross-border taxation to close loopholes that have allowed multinationals such as Starbucks Corp, Google Inc, Apple Inc and Amazon.com Inc to avoid paying taxes.

Finance ministers endorsed a set of common standards for sharing bank account information across borders with automatic exchange of information among G20 members to take effect by the end of 2015.

Richard Goyder, B20 Chair and CEO of Wesfarmers Ltd, said the group endorsed a system under which taxes are levied where the profits are made, but he expressed scepticism that the G20 would be able to agree on a policy palatable to all countries.