Wayne Swan parliament valedictory final speech financial crisis
Former federal treasurer Wayne Swan (Image: AAP/Mick Tsikas)

“In politics, timing is everything,” Wayne Swan told parliament in his valedictory speech yesterday. He added, “that’s also out of our control”.

He was referring to the election of Labor in 2007 immediately ahead of the global financial crisis and the ensuing recession/depression across major developed economies — one that Australia managed to avoid. Swan continues to defend Labor’s response to the crisis, led by himself and Kevin Rudd — to whom Swan has always given credit for his leadership in the crisis — along with then-Treasury head Ken Henry and Glenn Stevens at the Reserve Bank.

We knew from the failures of the 1930s and 1990s what recessions do. They destroy lives. They cost people their homes and their savings. Communities turn into ghost towns. They lead some to lives of misery — even suicide. We also know it takes a decade or more to fully recover … Not heeding those lessons would have been ignorant and irresponsible, so we did choose to act — to inject demand in the economy, to reject austerity policies that many, including the Murdoch press, were calling for and, in fact, still call for today.

Those with long memories will recall the government’s reluctance in 2009 to talk about the size of the deficit in that year’s budget — a reluctance reinforced by the omission of the deficit figure from the budget speech (an accident, Labor figures from the time say). Swan now has a different view:

We did all this knowing full well … what our opponents would be saying. They would hound us with slogans about deficit and debt. In departing this place, I have a perspective that perhaps I didn’t have in the heat of that battle. I can honestly say that I’m happy to wear that criticism — absolutely happy to wear it as the price of saving Australia from something that was far worse.

This wasn’t only a partisan defence of Labor’s actions at a time when there was hysteria in the air here as much as elsewhere, hysteria of the kind that shutters banks and sends economies over a cliff. For Swan the ensuing decade has proven the wisdom of the government’s intervention as electorates in other countries have revolted against economic business as usual.

Few of the governments in power at the time of the financial crisis survived. The Republicans lost the White House in 2008; Gordon Brown lost in 2010; Silvio Berlusconi in 2011, Nicolas Sarkozy in 2012. But that was a mere warm-up for the chaos of Brexit, Trump and the return of the far-right in Europe. For Swan, that political chaos and division is as much a product of the global recession as the lost jobs and economic growth.

[W]e have the rise of populism and ugly nationalism, particularly across Europe. We have the end of the last remnants of political consensus in the United States. We have the sweeping away of mainstream parties of the centre left and the centre right across Europe, and the prominence in Germany and the rest of Europe of the far right. We’ve got Brexit and we’ve got profound rising inequality in wealth and income across both the developed and the developing worlds … We have seen some polarisation in our country over the last decade, but it has been far milder and we should cherish the overall result.

For Swan that’s the connective tissue between the nearly forgotten chaos of 2008 and the political challenges of 2019.

We have generalised affluence, but that is now threatened here by rising inequality. That is something that we have to avoid at all costs. Inequality breeds disdain, resentment, suspicion, arrogance and callousness, and I believe it is ultimately what lies beneath the election of Donald Trump and the result we saw in Britain with Brexit… Nothing should spark our imagination and our policy push more than fighting inequality, because the future of economic democracy is actually on the line.

The difference, this time around, is that the challenges are more insidious, less galvanising, slower, but, in the long term, every bit as dangerous as the convulsions of the world’s financial system.

As Swan noted, vested interests and ideologues even opposed efforts to support the Australian economy in the face of the financial crisis. The opponents of efforts to prevent inequality from undermining democracy are more numerous, and stronger. Swan leaves the challenge of confronting them to a new political generation.

Peter Fray

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