Wednesday, September 21, 2011

Swan's gong. Here's Euromoney:

Finance minister of the year 2011: Swan confounds his domestic sceptics

Australia has struck it rich, and lucky, as it has used its natural resources to benefit from the China spending boom. But the careful stewardship of its treasurer, Wayne Swan, has played a key role in making it the best-performing economy among the world’s richer, developed nations. Not that he is likely to get much credit at home, as Eric Ellis reports.

BLESSED WITH, AND industriously exploiting, a natural resources bounty pointed at China that would embarrass Croesus, some Australians will find it strange that Euromoney has chosen their treasurer, Wayne Swan, as finance minister of the year.

The less charitable might even recall the words of Donald Horne, in his 1964 book The Lucky Country, which read: "Australia is a lucky country, run by second-rate people w ho share its luck."

Swan would probably be among the first to admit that he has indeed had some luck. But his work as treasurer is acknow ledged by Euromoney as much for what didn’t happen to Australia on his careful four-year watch – economic Armageddon in the trail of the 2007-08 subprime meltdown, which he confronted in his first year in office – as for what he positively did, positioning Australia to pow er through the new crisis looming from abroad.

"The fiscal rules that w e put in place to deal with the global recession when w e moved to stimulate the economy w ere ahead of the rest of the world," says Swan, in an interview from the kookaburra-chorused back verandah at his home in Brisbane.

"These were the sorts of rules that w ere ultimately adopted by the G20 in its summits through 2009, this whole notion that you needed an exit strategy. At the time we moved to stimulate, we put one in place and we’ve been applying it vigorously. It’s not happening anywhere else in the world."

As a result, Australia is one of only three OECD economies not to fall into recession since 2008, alongside Poland and South Korea. And it seems well placed to repeat the feat as the worsening euro crisis and US funk spread their infection. After two decades of grow th, Australia’s sustained expansion has been the most impressive performance of any member of the developed rich countries club.

That’s all very well, but is Swan a worthy recipient of the aw ard, in this era of booming Brics and roaring Tigers emerging to trump the sputtering west?

Former ANZ chief economist Saul Eslake of the University of Melbourne think-tank The Grattan Institute knows the 57-year-old Sw an well, and offers a qualified yes.

"Sw an is certainly after glory," says Eslake, "but for his party, not for himself. He’ll be thinking how this gong w ill improve Labor’s chances of winning the next election, seeing it in intensely political terms as will, of course, his political opponents."

That political capital might be useful, given that there’s every possibility that by the next time Euromoney considers the global field of finance ministers, Swan won’t be among them...

Continued at

Related Posts

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

. Okay, so who would be in my unity cabinet?


Anonymous said...

He does have spectactualr record.

Brillaint in overcoming the GFC once Ken Henry eventualy got through to him and just as brilliant at fiscal consolidation.
His major problem is he couldn't sell a beer at Bondi beach on a hot day

Anonymous said...

Over at Catallaxy the great economist Ergas has fitted a OLS to what happens to economies after the treasurer is chosen as the best by Euromoney.

"Taking all the winners since 1982, when a Treasurer wins the prize, his or her country’s GDP growth rate halves. But then again, losing half your GDP growth is surely a small price to pay for glory."

"The ordinary least squares fitted regression equation is:

growth in year after winning = 2.196+ 0.5345*growth in year of winning

The R-squared is 0.32.

Data are from the World Bank."

According to me, if the GDP growth of Oz this year is 1.3 % then next year it will be (using said equation) 2.196 + 0.5345*1.3 = 2.89085%

So how can you say that the GDP growth is halved?

I am just a humble mathematician . Please explain. Thanks.

Anonymous said...

jst remember what our Enry left out. most winners got the gong for reducung budget defcits that were far to large given the economic circumstances.

Post a Comment