Can Swan keep Australia flying?
Labor government treasurer Wayne Swan took the tiller just as the ripples from the US sub-prime crisis hit the country’s shores. He has to convince his fellow citizens that he can cope with an unpropitious global situation and keep the country on an even keel. He spoke to Eric Ellis.
Australia’s new finance minister still ha'national accountants body's to convince his fellow citizens that he can keep the economy on an even keel.
THERE MUST BE something in the water at Nambour State High School.
A rural secondary school in the heart of Australia’s semi-tropical, deep north, sugar-belt state of Queensland, Nambour High is a modest institution little different to the other state-funded schools of its type across middle Australia.
And the school motto – "Traditional values, modern education" – is hardly going to be sufficient to get students bounding from morning assembly to greatness in public life. There’s no noble carpe diem seizing Nambour’s day, none of Eton’s Latinesque flourish to inspire the fraternity from its playing fields to a glorious beyond.
But Nambour High is not only the alma mater of the relatively new Australian prime minister Kevin Rudd (the school’s head boy in 1974), barely a year in office after his Labor Party seized power from John Howard’s conservative Liberal Party last November. Another Nambour old boy, Rudd’s chief economic manager or treasurer, Wayne Swan, was three years ahead of Rudd at the school.
Unsurprisingly, Nambour’s present principal, Wayne Troyahn, says his school’s nurturing of such political luminaries speaks to "the quality of the teaching over a long period of time". But politics and the economy are fickle beasts and the way Labor’s Queenslander leadership, the "Bananarati", nicknamed after one of the semi-tropical state’s primary exports, have started their rare try at high office, might mean that principal Troyahn will come to reconsider his boast.
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"When the OECD hands around its competition toolkit, they hand around the Australian experience. We are seen as a country that has changed dramatically and prospered as a consequence from its engagement with globalization"
Wayne Swan |
A year after Labor took power, about the best description Australians can offer of the Rudd-Swan performance in office so far is "unremarkable". Swan is being assailed as colourless, uninspiring and lacking what it takes to maintain the Great Australian Dream of limitless prosperity – to profit from the world, notably its Asian neighbours, while insulating the island nation from the downside of globalization. Australia’s vicious blogosphere is less charitable. Swan is a "rabbit caught in the headlights," says one blogger. "Uncertain and unimpressive in the portfolio," offers another. And then there is the usual laundry list of insults from the opposition in parliament – common fare in the robust rough and tumble of Australian politics.
"Given that Swan was reasonably well prepared for the job when he came into it, he did appear to be a bit overawed by it, a bit intimidated by it," says Saul Eslake, chief economist at Australian bank ANZ, who nevertheless gives his management a tentative tick. "It’s not rabbit in the headlights, that’s too strong, but he didn’t show a surety of touch as some of his colleagues did on coming into office. Even if things were starting to get difficult globally, no one could have possibly blamed him. I don’t think it is any lack of understanding on his part but maybe a lack of confidence in what is really the first really big job that he’s actually had."
Swan disagrees. "I’d like to know what I haven’t done," he says. "The other criticism is that we have done too much. The fact is, we have done everything we said we would do. The hallmark of our first budget [in May] was that we implemented all our promises – not easy given the environment that developed. And secondly, we commenced plans on a very big reform programme spanning a significant period of a year, all the long-term issues that the other mob [John Howard’s Liberal Party] put in the too-hard basket – all very substantial pieces of work."
But events always dog politicians and Swan pleads that in his first year "the global economic conditions changed dramatically, that is what was unexpected". However, the emerging crisis had been a feature of the election campaign. As the first signs of sub-prime turmoil began to buffet Australia, the then incumbent treasurer, Peter Costello, used his previous decade-long experience in office to unsuccessfully seek to convince voters that he alone had the right stuff to protect Australia.
Swan says: "From early January, when we had the second iteration of the credit crunch, two things happened: our domestic inflation forecasts were upgraded [inflation has hit a 16-year high, reaching back to the last time Labor was in office]; and then we had all the global issues, the sub-prime issues that put further pressure on borrowing costs, both for housing and business. And of course the march of the price of oil and the global inflation that came with it, at precisely the time we least wanted it.
"What the international uncertainty says to us, for the things we can control, is that we have to do our outmost to put in place the right settings."
Unfair criticism
Swan says the criticism of his stewardship as lacklustre and directionless is unfair as Labor is still executing its election commitments. He ticks them off; training, infrastructure, computers in schools, tax reform, a national broadband network, affordable housing, an emissions trading scheme. "All these issues are burning," he says. "I don’t think there is anything that is conducive to quick fixes. All these things are happening. We’ve had the quick fixes before and now we are living with the consequences. Everything we are doing, the fundamental reform, is generational."