Monday, August 09, 2010

This Swan fellow... what's he really like?

A funny thing happens when you talk to Wayne Swan. You feel as if you are getting somewhere, until you read back your notes. The Treasurer is "encouraged by the results," he finds them "encouraging," the government "should not be complacent," the results are "quite encouraging," he is "not complacent," and so on.

Swan isn't alone in mangling the conventions of conversation in order to deliver a message. He is actually better at it than most, and Treasurers are supposed to be a bit boring anyway. But when circumstances demand a change of approach, Swan's approach can be excruciating.

As the budget headed toward deficit in late 2008 the 7.30 Report's Kerry O'Brien asked him, "Let me hear in plain English, that the budget is within a hair's breadth of going into deficit. It seems silly to me that anybody would bother to argue that proposition. Will you accept going into deficit, if you have to, to maintain appropriate stimulus of the economy under the threat of recession and high unemployment?"

Swan at first dodged the question then conceded that if things were to deteriorate significantly "it may well be the case that we could end up in the area that you're speculating about."

O'Brien: "Well, say it - in deficit".

Swan: "I am not going to say it because we're projecting modest surpluses Kerry."

When Swan brought down a budget forecasting a deficit six months later the ABC's Fran Kelly noted that in an Australian first he had delivered the entire budget speech without once mentioning the deficit.

She asked if he was scared of saying it out loud...

He replied: "No, I'm not scared of saying the deficit number and…"

Kelly: "Do you want to say it now? What is the deficit?"

Swan: "…and we outlined it in great detail last night and it's 57".

In part this wariness was to be expected from a Labor Treasurer forced to deliver a deficit by global forces truly beyond his control. But it might also stem from what appears to have been a pretty ordinary preparation for the job.

Although Shadow Treasurer for three years in the lead up to the 2007 election Swan went into it with policies so poorly designed at least one had to be redesigned and was then hardly used.

If you haven't heard of the Low Tax First Home Owner Savings Account it could be because, in the words of Treasury documents released under Freedom of Information laws, "no-one uses it."

Intended for battlers, but designed to mimic superannuation so that the biggest tax rewards went to the highest income earners, Swan said it would help around half a million first home buyers save for a deposit. Neither understood nor wanted it has instead helped 15,300.

Swan no longer mentions his much-hyped bank-switching package. The website is prefuntory, the hotline doesn't actually exist, and over the year to October 2009 a mere 1818 Australians had asked for forms.

The tax policy Swan brought to the election was a carbon copy of the Coalition's in all but one respect. Although Swan said it would provide "incentive to people out there who will work additional hours" its design changed the Low Income Tax Offset in a way that pushed up the effective marginal tax rate faced by average earners by 4 cents in the dollar. On taking office Treasury told him it would prompt 33,000 Australians to cut their working hours.

The centrepiece of his 2007 tax policy, the Education Tax Rebate, is massively underused with the families of 400,000 of the 2.1 million eligible children not bothering to claim it, perhaps because it requires them to collect and save receipts, something Swan railed against in responding to the Henry Tax Review vowing to end "the hassle of shoeboxes full of receipts."

Swan was also ill-prepared by circumstance.

The morning after election night 2007 the Treasury told him it had $20 billion in the kitty. The biggest problem would be how to handle the boom. That's one of the reasons Swan and Prime Minister Rudd set up the Henry Review with a mandate to report just before the 2010 election. They expected to be in a position to give money away in responding to Henry's advice.

The ground moved from under Swan as he was finding his feet. It hasn't settled.

Asked what is the most important requirement for doing the job he says it is the ability to respond to changing circumstances. And although he is bad at responding quickly in interviews and press conferences (if improving), he and Rudd have shown themselves to be world leaders at responding where it matters.

Australia's response to the global financial crisis was described by Nobel Prize-winning US economist Joseph Stiglitz last month as "one of the most impressive economic policies I have seen, ever". The IMF, the OECD and an alphabet soup of an international organisations agree. Along with China, Australia has become the global pinup child for crisis management, something that reflects well on Swan and Rudd as well as the Treasury and Reserve Bank who advised them.

Swan goes into the election with something his opponent Joe Hockey does not - a demonstrated ability to take advice and implement ground-breaking world-leading economic policy on the run.

But ask him the achievement of which he is most proud and he'll nominate something else - his success in avoiding recession while keeping Australians in training and in work.

"In previous episodes Australians would have lost their jobs, lost their training places, and probably never returned," he tells me.

"And that's important for the economy - we have held on to productive resources," I ask him.

"Important for the economy but important socially as well," he corrects me.

Wayne Swan is growing in confidence by the month. He genuinely believes that after the global economic crisis there's nothing he can't handle. His own on-the-job training has been first rate.

At times it morphs into overconfidence. His Resource Super Profits Tax was wrongly named and very poorly sold. He has doubtless learned from that as well. Wayne Swan is improving all the time, as a Treasurer should.

Published in today's SMH and Age

Bank Account Switching Package FOI Documents

First Home Saver Accounts FOI Documents

Related Posts

. Hockey through the looking glass

. Labor's home saving scheme is now only half a dud

. Swan's bank-switching package is a useless joke

. The Swan tax cuts that push up the effective tax rate