How Swan rates as a treasurer
by: Tom Dusevic, National chief reporter
From: The Australian May 07, 2012 12:00AM
DURING those heart-pumping, scrabbling early days of the Rudd administration, Labor's ministerial elite was transformed: paunches spread, hairlines receded, once-bright eyes became permanently puffy in a matter of months.
Under the prime minister's helter-skelter work regime the grind marks and pastiness set in.
Except in the case of Treasurer Wayne Swan, who always appeared surprisingly taut and tanned, despite a lack of sleep, heavy toil and incessant travel. He was the often shaky and tightly wound successor to Peter Costello, who became treasurer at 38 and after a dozen budgets looked as if any youthfulness had been sucked clean out of his being.
Swan, 57, presents his fifth budget tomorrow. Somewhat perversely and counter-cyclically, as the sticker price on the Gillard government plummets, the Treasurer's stock is rising. Last year, Euromoney named Swan Finance Minister of the Year, an accolade Costello never scored and one Paul Keating was accorded in 1984.
.The resilience of the Australian economy, while almost every other rich nation has slumped, means Swan is feted by his peers at international gatherings, such as the G20 forum. Tail up, the "old Labor" Treasurer has lately picked fights with both finance and mining capital.
Still, most, though not all, of 10 long-time observers of the economic, business and political scene contacted by The Australian believe Swan is not in the league of his illustrious forebears and that history will cast him as a steady, if lacklustre, figure in an era of economic and political tumult.
Given he has served two prime ministers since November 2007, faced three shadows, steered the economy through the global financial crisis and accumulated four sizeable deficits, it's apposite and reasonable to assess how well Swan has performed as Treasurer.
On what basis, however, do you judge him? In the manner of Julia Gillard, Swan can say "scoreboard": jobs, growth, inflation, interest rates. His critics point to debt and deficits despite near-record terms of trade. Yet mere numbers are not enough.
Obviously, you must consider his management of the economy, policy salesmanship, responses to crises and the confidence the broader community has in his stewardship -- whichever way you cut it, this is the first and last of our politics, a proxy for national confidence. No pressure, Wayne.
"Swan has been an adequate, rather than a good treasurer," says one of the country's pre-eminent former public servants, who likes the one-time Labor Party official. He says Swan is a more overtly political, as opposed to economic, player in the job. Witness his haranguing of the big banks on interest rates. "Swan either doesn't understand what the Reserve Bank does, or he chooses to ignore that knowledge to make a political point."
Swan is "more partisan than either Keating or Costello was" and, importantly, he doesn't "own the position" like his predecessors, says the retired official. Of course, Swan has not been in the job as long, his persona is more dour and his profile not as high. Others say Swan is consistent, steady, technically competent, but one-dimensional.
Says another former senior official: "I remember in the early days of the Howard government being told by one of my colleagues that 'Costello is a Melbourne barrister. What more is there to know?' Well, Wayne Swan is a Queensland politician. What more is there to know? You have to accept that this guy is a very political animal and that's been his whole existence."
A serving Reserve Bank board member believes Swan has been a "very good" custodian, particularly in times of crisis. The person says the bank guarantees (allowing institutions to raise funds overseas) in late 2008 and preparedness to follow Treasury's advice to splash a heavy dose of cash on households kept the economy ticking over (as did a cascade of RBA rate cuts). The subsequent $42 billion fiscal stimulus package in February 2009, including the controversial and costly school building and home insulation programs, was also effective in keeping the economy out of recession.
Was it worth it? "It's easy in hindsight to say there were problems with safety, administration and value for money in those programs," says the RBA director. "But the size, speed and targeting of the stimulus was, on balance, the right move."
Veteran market economist Saul Eslake speaks for many in his craft when he says Swan's economic management, a treasurer's most important task, has been "pretty good". That's by no means an easy thing to do, he says, because it's about much more than solid outcomes on inflation, the budget and economic growth. Ultimately, it's a matter of exercising sound judgment.
"Swan has had much tougher circumstances to deal with than Costello," says the Bank of America Merrill Lynch chief economist, who likens the Liberals' charmed period in office to scoring a Test century against Sri Lanka or Zimbabwe in that earlier era.
"When Swan has had to make a big call, he's generally made a good one," says Eslake. "Did Labor overdo the stimulus? In hindsight, yes. But you don't get a second
go. If it's a choice between doing too little or too much, I would much rather run the risk of doing too much."
As Swan and his colleagues promote the various measures in Tuesday's budget, you'll hear words such as Labor values, fairness, need, spread the benefits and participation. Where opponents see a class warrior and apparatchik, a milker of the rich and a scourge of aspiration, his admirers see a big-hearted man devoted to improving opportunity for all.
He's not a natural fit for the shiny end of town. Swan is gregarious and makes time to see business folk in Sydney, Melbourne, Brisbane and beyond; he certainly makes more speeches and is easier to meet in person than Costello, who preferred a quiet lunch on a Friday at the Melbourne Club with an intimate or the cloistered interior of his parliamentary suite.
One experienced company director has been surprised, and heartened, by Swan's capacity to listen. "Just when you think a proposal has no chance of getting up, because it runs against the advice of Treasury officials or personal advisers, the Treasurer will say, 'Tell me more, I'm interested'."
But in general, company executives and directors do not warm to Swan; they respect the office, appreciate his willingness to engage with them. But to a person, the corporate types question his feel for their concerns and his understanding of what drives enterprises. "It's frustrating to keep bringing up the same issues with him," says one finance executive. "He's either very cold, or simply going through the motions in meeting you."
Yet for a man who takes pride in his ability to stay close to his many constituencies, Swan botched the introduction of the resource super-profits tax, which emerged in 2010 from the Henry tax review. The industry was not consulted before the details were locked in. There was a revolt against the tax design. Swan was tongue-tied and the experience scarred him; Labor lost its leader along the way, while Swan got a promotion.
Another way into this form guide is to take Swan's critique of what makes a good treasurer. As his principal nemesis for three years, Swan argued that Costello was lazy, lucky, gutless, out of touch and too long in the job. According to Swan, a good treasurer displays the following attributes: rigour in assessment, attention to detail, preparedness to take tough decisions (and argue for them externally and internally).
He may fumble the odd statistic or economic term, but the portfolio is huge. Swan is bright, well-briefed, methodical and works incredibly long hours to stay on top of his in-tray. There is little margin for error in his job, so Swan habitually errs on the side of extreme caution in decision-making and salesmanship.
A senior figure in the Hawke-Keating government argues Swan wasted a golden opportunity in his first budget to get tough on Howard-Costello era spending excesses. "There was so much junk Swan could have removed from the budget when he had political cover."
Swan's explanation has always been that the 2008 budget was less harsh because he had been warned of a looming global debt contagion (and he was right). "Fine," says the Labor source. "I'm not arguing against the amount of spending in that budget, but its composition. Swan missed his best chance to fix the structure of the budget."
Swan's preternatural aversion to risk limits his ability to carry an interesting idea or to feel comfortable with rhetoric that rises even a little above the banal scripts pumped out by tyro adviser-slaves. In political stoushes, Swan fires up when backed into a corner or if baiting comic-book foes such as Clive Palmer or Labor's Doug Cameron.
But Swan has not been a "spear-carrier for reform", as a number of people commented for this story. He is more often a defender of his clan's vested interests, particularly those of the Australian Workers Union. He has not been the champion of the free market that policy wonks have come to expect from treasurers.
At ALP conferences, Swan has not used his stature to shake Labor from its complacency, or been a bulwark for the Hawke-Keating model of social democratic reforms. So we see new assistance flowing to the vehicle industry, even more business regulation and a shelving of the Henry tax agenda on his watch. Treasury has about as much sway these days as when Costello was being serially rolled in cabinet by Howard.
Keen economic observer Rory Robertson once said the "macro" role of Treasurers, their supposed control of the levers, was overstated. In truth, the job was akin to being head of government marketing (economic). On a typical day, he argued, "the job is to explain that everything is going very well, and 'that's because of us' ".
If Labor's economic success, such as it is, has not been communicated, it is primarily Swan's failure. Eslake observes that both Keating and Costello had literate and commanding prime ministers to aid them in their sales pitch. He says Gillard's poor presentation skills have compounded Swan's inability to construct an attractive economic story, hence Labor is "unable to make a silk purse out of a silk purse".
The overall marketing effort, not to be confused with surface issues such as panache or memorable lines, fails first in the set-pieces of parliament and policy announcements. "I know exactly what Swan is against," says the former chair of a government body. "I'm not sure what he stands for."
Swan ardently believes he is playing a long game, engineering future prosperity and opportunity. When the cycle turns, he'll have the country and its people ready. "In many ways the most important characteristic is to have a degree of foresight, to actually be ahead of the game," Swan told this reporter during the 2007 election campaign.
"For too long, our national budgets have focused on the next election, not the big challenges facing our country in the next decade and beyond." On this score, Swan can point to Labor's advances in superannuation, skills development, disability insurance, infrastructure and the nascent outline of policies to address an ageing population and our future in Asia.
The first story of tomorrow's budget will be the plausibility of Swan's path back to surplus. A simple tick or cross will do. What ultimately matters more to the Treasurer will be the markers he puts down for the long haul.
Politics at present obliterates such considerations. Yet again, Swan finds himself, under the pump, on very shaky ground, with limited options.
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