THE GUARDIAN PODCAST WITH KATHARINE MURPHY
TUESDAY 9 MAY 2017
KATHARINE MURPHY: So, Wayne Swan, thank you very much for joining us.
WAYNE SWAN: Great to be here.
MURPHY: So I thought we’d start – because obviously you had a very intense period in the last Labor government as being the Treasurer in that government. Since Labor has come in to opposition, you’ve done quite a lot of work and activism around the subject of inequality. Why? Why has that become a sort of central preoccupation of what you’ve done?
SWAN: Well, it has been a preoccupation for the whole of my political life. In fact, my first book Postcode was precisely about disadvantage in Australian society, and the threat that that posed both economically and to the very fabric of our social relations. But I guess it was the experience in government, and most particularly the battles that our government had with powerful vested interests when it came to implementing essential structural reforms, which would not only drive growth, but spread the opportunity from that growth much from evenly across our population. For example, you know, my monthly essay – 0.01% of the power of vested interests – my Bruce Springsteen speech – all of those were received by the wealthy and the powerful in a very, very unflattering way, and I was vigorously attacked by those vested interests for what they call ‘class war’, when in fact what I was arguing for was a much fairer economic model which would drive stronger economic growth on the back of giving a fairer share to working people. You see, I just don’t think that you can have a strong and prosperous economy built on the back of a shrinking share of GDP going to workers on low-and-middle incomes, and that’s effectively the outcome that we’ve seen around the world from what I call ‘trickledown economics’. And ‘trickledown economics’ is all about tax cuts for the rich, hacking up the social safety net, deregulation for the wealthy and powerful, and wage suppression for everybody else. So the work I am now doing, particularly through Chifley, on inclusive prosperity recognises that Australia is at the tipping point of going down the sorts of outcomes that we are now seeing in the United States and right across Europe. I don’t want Australia to go down the American road of trickledown economics. We didn’t do it under Hawke and Keating, and it is absolutely essential that we don’t do it now.
MURPHY: Well, in terms of not doing it under Hawke and Keating, there has been, as many listeners would know, quite an interesting debate over the last little bit where the former Prime Minister has been out in some outlets – well, he said recently that the neoliberalism project is dead. Then over this past weekend in The Australian, he was making the point, I think, that neoliberalism was not actually his agenda.
SWAN: That’s right. I mean it wasn’t. It can’t accurately be described as such. You know, people who are trying to do that must have two eyes closed. The fact is that there was a big renovation job required on the Australian economy from 1983 onwards, but to describe that as pure neoliberalism is simply unfair, but also misunderstands the nature of the policy response which are required as we go forward, because yes, we simply have to get rid of neoliberal economics, but we have to have a growth model which works, and a growth model which distributes the benefits of that growth fairly. Hawke and Keating built that growth on the back of a very substantial social contract. You know, Medicare – a big, big structural reform. Compulsory superannuation – a structural reform admired by every other country in the world, and not possible in any other country in the world.
MURPHY: So do you think that’s one of the reasons - obviously inequality in Australia is growing, which is part of the reason for your activism, but obviously the Australian economy is not America – we are not at the stage that America is at in terms of how inequality manifests in our own system.
SWAN: No, but we are heading that way.
MURPHY: No, I am not discounting the fact that we are heading that way.
MURPHY: I am just trying to look at reasonable distinctions, right? Is the reason we are not America partly the social contract that you are talking about? That when Keating and Hawke had a very pro-market agenda – had a very, you know, sort of, transformed the entire Australian economy, but did it with social support, social capital like Medicare, like public education, like all of those things – is that the reason we are not America? Because we have approached our market transformation project differently?
SWAN: Sure. By in large it is, but we need a new suite of policies which recognise something that is now fundamentally different in Australia. What we have seen is the radicalisation and the Trumpification of the Liberal Party, and very significant sections of the business community align with very wealth plutocrats who are driving far harder for a much stronger and bigger and more powerful trickledown agenda. So at the moment that is encapsulated very much in the stupid decision of the government to go for a massive corporate tax cut, and argue that somehow that will drive jobs and growth for the future. That’s the very last thing that anyone ought to be considering to drive jobs and growth in the future, but it is an example of where the conservatives in this country – and I will refer to them if you like as ‘members of the Deep State’ – they are a – there is a section of the Liberal Party that are really adherents to Reagan-Thatcher Tea Party economics. They are joined in that by significant sections of the finance community, they are joined in that by many wealthy individuals who have become much more radical in their desire to achieve substantial wealth concentration in our society, rather than a fairer distribution wealth. And they are pushing against what is now rapidly recognised around the world as the need for the world to more fairly share its wealth. Otherwise, we are going to end up in a situation where democracy itself is threatened. Now, we have already seen this in the US through the rise of Trump, we have seen it across Europe, and although we didn’t see it in the outcome of French Presidential election, the voter non-turnout was substantial, and I don’t think polarisation in that country has yet reached the sort of levels it could with the political fallout it may then bring.
MURPHY: I want to get back to Emmanuel Macron, and what he might represent shortly.
MURPHY: But let’s just talk about your advocacy, because over the last several months you’ve made a number of interesting speeches about where you think Labor and centre-left political parties need to position themselves in this broader inequality argument that we are canvassing in the podcast today. You’ve argued, I think, that Labor needs a muscular economic agenda in order to speak to voters who are flirting with leaving – well, not voting Labor and voting for one of the alternatives. So let’s get into that a little bit. What do you mean by that? Does it mean – for example, there’s a live debate in the Labor Party at the moment about a Buffett Rule, for example. Does it mean that Labor should adopt a Buffett Rule?
SWAN: Well, we can’t do it by offering trickledown-lite. We can’t do it, you know, by offering some sort of sickening, Davos ‘third-way’ approach. I think what it really requires is some very substantial structural reforms, particularly across taxation, across corporate governance, and across fiscal policy and regulation more generally in the suite of policy that are required to drive growth and spread the opportunity. For example, taxation – it is absolutely the case that the demise of progressive taxation around the world has been one of the principle deliveries of the rampant inequality that we are now experiencing, and what the government is seeking to do with its corporate tax cut, and also by its ‘softly, softly’ approach on corporate tax evasion, is to appease some of the main drivers of inequality in our society. Multinational corporations are part of what I’d call that ‘Deep State’ challenge that democracy faces, because they just think that they should be able to say and do whatever they like, and they should be able to rewrite the rules in their favour. So I think when it comes to corporate taxation we need a very muscular approach, and that’s been demonstrated yet again by the Federal Court decision in the Chevron case a couple of weeks ago. I also have the view that we can’t delude ourselves into thinking that just the substantial funding and reform of education is really the solution to the problems of rampant inequality. And don’t get me wrong, I am a very big supporter of the enabling power of universal and quality education from cradle all the way through, but anyone who thinks that you can deal with inequality just by investing in education is simply whistling in the graveyard.
MURPHY: So you can’t leave it to a social-capital agenda, and be neutral on some of the economic levers?
SWAN: No, that’s right. The power of the trickledowners – the leading lights of the ‘Deep State’ – is such that it does need substantial regulatory change to make markets more competitive, and substantial regulatory change to ensure that private investment is driven by long-term considerations and not just short-term speculative gain. That goes to the core of our corporate regulatory system, so there is a very big agenda out there that is required if we are going to see very substantial job growth. Now, to me, the central metric really of achieving inclusive prosperity is tight labour markets. Tight labour markets more than anything else is the central objective that we have to have. I saw one of the unions marching on Labour Day with a great slogan – “good jobs, great life”. It’s a truism in this society – it is a truism for the future prosperity of our economy. So for me, the policy agenda has to add up to the achievement of full employment, but not just in insecure jobs with no pathway to the future, but “good jobs, great life”.
MURPHY: So it’s obviously more complicated than whether or not Labor adopts a Buffett Rule.
SWAN: Yes, that’s right.
MURPHY: Obviously. But what’s your view on a Buffett Rule?
SWAN: Well, a Buffett Rule would be one of those changes in a suite of changes to the tax system. I mean, I am sort of – I am happy to have a discussion with my colleagues about what those suite of changes is, because it is all of the changes put together that make the system either progressive or not. So a Buffett Rule on its own doesn’t do the job, but do you have a system which does the job without a Buffett Rule? Well, I think it depends on all of the other changes.
MURPHY: So are we talking about divestment powers, are we talking about more - - -
SWAN: Well, I think in the tax system itself, what we are talking about is making nominal rates of tax real.
SWAN: Because they are observed in the breach by the wealthy. People on incomes like mine aren’t paying anywhere near the nominal marginal rate that they ought to be, because they’ve been accessing negative gearing and a whole lot of other loopholes in the corporate tax system. The joke here is that very few are paying the thirty per cent nominal rate. The average – or effective rate – is twenty four cents, and many are paying a lot less. So the point of the Buffett Rule, really, is to align a nominal rate much more closely with an effective rate.
SWAN: So I am a big supporter of that objective. Now, whether that is achieved through a Buffett Rule or not, I don’t know. But I won’t be taking a backwards step when it comes to these questions of making our tax system – both the personal and the corporate – much more progressive.
MURPHY: Well, the Treasurer Chris Bowen has indicated on a number of occasions now that a Buffett Rule will not be part of Labor’s policy.
SWAN: Yes. Well, we will see. We haven’t seen what Labor’s total policy is going to be, so I will reserve my judgment on it until we see the full suite of policies, but there – there is no way out of here in terms of the Labor Party’s aspiration for a fairer society and good job growth unless we have a strongly progressive tax system. And it may or may not require a Buffett Rule, but what it does require is a central political commitment which says to working people, “We are on your side. We are not over there with all of these people who have been avoiding their responsibilities and skewing our economy against working people”.
MURPHY: What about – let’s get back to Emmanuel Macron, and his victory in the French Presidential election. One set of analysis would say that there is still a market – a political market, I mean – for centrism. That it indicates that the people on the centre-left who have concerns about inequality – the concentration of wealth and power in economies – that there is still – I think you were quite dismissive about ‘third way’ thinking a minute ago, but there is still a viable appetite – a public appetite for what you might characterise as ‘third way’ and ‘third way approaches’ by centre-left politicians. What do you think?
SWAN: Well, that judgment only stands because he is running against someone who has fascist tendencies.
SWAN: The really interesting thing to come out of the French election is the significant increase in those people who didn’t vote.
SWAN: So I don’t think it necessarily proves that centrism is the way ahead, and I’m – and I wouldn’t be arguing that my views are anything other than centre-left. I think the centre of gravity in politics has moved so far to the right that the views I have held all of my political life are now – now look much further to the left than they did when I first got involved. So I am not arguing for an all-encompassing public sector which takes over the activities of the state.
SWAN: I am actually arguing to make capitalism work – to make capitalism possible within a democracy. You see, the social contract that prevailed in Western capitalist-democratic countries post-World War II was a contract, basically, which expressly decided that there would be redistribution to working people. Why? Because of the threat of communism in the post-War era. Now, as trickledown economics has become all-encompassing, and as its agents – who are its principal beneficiaries – come to control the levers of power across so many democratic countries, we have seen a skewing and a relegation to the dustbin of essential, centrist policies which have delivered prosperity and distributed it fairly.
MURPHY: What about – would you really say that – setting aside Trump, which is just a thing in itself – would you argue that the right is more right-wing than the right was in the Thatcher period and in the Reagan period?
SWAN: I think it has its tentacles more deeply entrenched across all of those economies than many people fully appreciate. You see, I don’t see Trump as anything other than the logical conclusion of the Thatcher/Reagan period.
MURPHY: Of what? Of Chaos Theory?
SWAN: Well – no, no – but his central economic bent is trickledown. Now, he covers - I mean, he’s formed a government of millionaires and billionaires.
SWAN: I mean, Trump is the logical conclusion of the Thatcher-and-Reagan right era. He covers it with a slightly different bent on certain elements of social policy, but I think he is precisely that. And what has actually shifted in Western democracies is any balance around the idea that the state, working with the private sector, can achieve better outcomes than shrinking government and handing all the loot to the rich.
MURPHY: What about the dangers of overreach? What about the dangers of overreach in the sense that political history would say to us that when the right is in the ascendency, if the left “overcorrects”, it doesn’t work out so well for the left. Then you have periods of realignment where in Australia, for example, we went from the Whitlam period to the Hawke and Keating period. In the UK, we went from a long period of being moribund with the Labor Party, to an electorally-successful period with Tony Blair.
MURPHY: What do you think about overreach?
SWAN: Well, I don’t see myself in either of those ways. I call myself a Laborist. I think Labor parties were formed for a reason, which is to look after the economic interests of working people, and I think the Labor governments in this country have done that very well. It certainly was done very well during the Hawke and Keating period when the international trend was all to the far-right, and they hung on much longer in that period. I am very proud of what we achieved in Australia during the Great Recession. We stood out among all governments around the world by putting in place what I would regard as a labour agenda. And I didn’t regard that as overreach, and the sort of agenda that I’m talking about now is a contemporary labour agenda recognising that if we are to be successful, then valuing the labour of our population has to be a far higher priority than it is around the rest of the world, because you could argue, basically, the voice of labour – and it’s suppression – is the reason why the right has been so ascendant across so many democratic countries around the world, and mostly particularly, in the United States. And when I say the voice of labour, I’m not just saying trade union membership, I am saying something far different. For example, when you look at our major company boards, you know, it’s just the old boys and girls club. You know, anyone who seriously thinks that corporate Australia is in great nick because there is some diversity is kidding themselves. So I think, for example, part of a labour agenda has got to make sure that the voice of labour is not just heard through collective bargaining and trade unions, but is heard in all sorts of places. God forbid, why don’t we bring back a worker to the ABC Board?
MURPHY: A representative of the employees.
SWAN: And a whole series of things that can flow from that. Profit-sharing at the firm level, for example, and any number of measures need to be taken to reinforce, for the good of the economy, the voice of labour.
MURPHY: I think it is abundantly clear from the context of our conversation that we are talking about labour with a ‘u’ here, as opposed to Labor with an ‘o’, but let’s just clarify we’re talking about labour with a ‘u’.
SWAN: Yes. Well, both, because the Labor Party came out of the labour – ‘o-u-r’.
MURPHY: Yes, of course. Yes, we are saying the same thing.
SWAN: So I am in the Labor Party – I am in the labour wing of the Labor Party. How about that?
MURPHY: Yes, totally. We are completely covered. Now, we have spent quite a bit of time in this conversation about the economic agenda of centre-left political parties at this point in history. I want to think about the cultural agenda for a moment, because there are a number of working people who have parted ways with the Democrats in the US, and with Labor in Australia probably too, on the basis of a perception that the Democrats and Labor in Australia are too into social projects, too into the rights agenda, too into the – I don’t know, whatever you want to call it – climate change, fashionable causes - they’re not focussed on the interests of working people.
MURPHY: We did see that play out in the US Presidential elections quite substantially.
SWAN: Well, because we are so passionate about equality, whether it is economic equality or social equality, we are passionate about both.
SWAN: But unfortunately, sometimes that can create the impression that the only thing we talk about is social equality, and not economic equality.
MURPHY: Yes. So is it a simple matter of translation, or do you need to speak about the equality agenda in terms that people, regardless of whether they lean conservative, lean progressive, have you got to find some language around that appeals to all people?
SWAN: Look, there’s no stepping back from gender equality and sexual equality at all in any of the thinking I do about it, but I have written about the fact that some people only ever hear us talk about social equality, which then creates the impression that we don’t care about economic inequality. And you can’t really, at the end of the day, have one without the other, but I think there is – there certainly is a political task to elevate up to the fore in all of our discussions the platform of what I can labourism, which is economic equality. We don’t walk away from gender equality at all, or racial equality, and in fact, you can’t live in a truly equal society where there is social mobility which is then afflicted by racial discrimination, or sexual discrimination, but I think we just – it is a question of making our voice very clearly heard on these key economic questions, and making sure we don’t sound too ‘third way’, too, sort of, ‘Davos’, too technocratic in our presentation of it.
MURPHY: Is there a worse insult than sounding too ‘Davos’? I’ll just leave that out there for our collective amusement, but let’s walk back to cultural agenda again for a moment, because it is not – you’ve got to also deal with the new nationalism. I don’t think issues of race or sovereignty can be avoided in contemporary political discussion. We see them manifesting everywhere in different ways, so how does Labor front up to those issues? We’ve seen Bill Shorten this week getting into some trouble for an advertisement which is about Labor’s ‘Australia First’ agenda, which features only white people. We’ve seen Bill Shorten have to say, “Oh well, maybe we will just have an ad featuring white people”. I don’t want to get bogged down - - -
SWAN: Sure, and I get what you’re saying, but I – you know - - -
MURPHY: How do you walk this line?
SWAN: The future of this country is in our openness. There’s no question about that. That doesn’t mean to say that we have to accept discriminatory bilateral trade deals, and there is nothing preordained about those either, but the future health and wealth of this country depends on our relationships in the region in particular, and that’s where I think our diversity is our biggest economic strength. You know, we are the party of multiculturalism, and I, you know, there is no way that we would ever walk away from that, and nor should we, in economic or social means. But you question is a broader one than that, because you can be nationalistic and open, you can be patriotic and open, and, you know, to be a proud Aussie is something that everybody should aspire to, in my opinion. And, you know, when I move around the region in particular, the rest of the region is pretty proud of Aussies. The interesting thing that I find, and I found it particularly after we produced our Asian Century white paper, as we moved around the region, that finally we had started to bury some of the ghosts that had been there with us in the region since White Australia, that we wanted to be part of the region, and not have the region come to us. And there is nothing that isn’t patriotic about that. A good engagement in the region – that Australians doing what they do well here, doing it well elsewhere in the world – and working with the rest of the region in particular is something that we should be proud of, and it’s something we should make a lot more of.
MURPHY: A lot of centre-left people though eschew patriotism, they think it’s some sort of – because a lot of centre-left people are - - -
SWAN: Well, that’s just dumb, because – my father fought in World War II, he fought the good fight if you like. The one that was really justified, the one that saved Australia, and he was TPI. His father fought in the First World War - the bad war, if you like – and came back after he was gassed and died young. Australians have always had a very good reputation for doing their bit. Now, sometimes international arrangements – we’re not all happy with what those things are, but, you know, as a good international citizen pulling our weight, people ought to be very proud of that, but not xenophobic. There’s a huge difference between xenophobia and being a proud Aussie, and so we’ve talked today about the importance of economic equality. We’ve talked today about the importance of racial equality and sexual equality. Being a country which is an exemplar of all of those things is something we should be proud of, and that should be Australian patriotism.
MURPHY: But then do you appeal to Australian patriotism through ‘Australia First’ messaging that we have seen through both the major political parties over the first - - -
SWAN: Well, I don’t think there is any problem with what Bill has been doing on ‘Australia First’, say for example, on diversity on 457s. That duds everyone. That duds our neighbours as well as it duds us, and, you know, those are things that are simply exploited by very bad employers, and I think it is very unpatriotic to be a bad employer.
MURPHY: Well, listeners will know that we could go on forever really, Wayne and I, when we get talking, but it’s – we’re a far distance in, so I think we are going to have to wind up on this occasion. Wayne Swan, fighting words, thanks for joining us.
SWAN: My pleasure.
TUESDAY 9 MAY 2017
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