WAYNE SWAN MP
MEMBER FOR LILLEY
SKY NEWS AM AGENDA
FRIDAY, 14 SEPTEMBER 2018
SUBJECTS: Global Financial Crisis, Collapse of Lehman Brothers, Fiscal Stimulus.
KIERAN GILBERT: Welcome back to the program. With me now, the former Treasurer Wayne Swan. Ten years on from the collapse of Lehman Brothers. It’s hard to think that it’s been as long as that, but what’s your reflection on the days of those dramatic events at the end of 2008 and the start of 2009?
WAYNE SWAN, MEMBER FOR LILLEY: Well, the day that Lehman Brothers collapsed was the day that the crisis morphed into a threat, not just to the Australian economy but to the global economy. It was simply terrifying. And for the next nine months, the global economy and global demand fell off a cliff and countries, particularly developed countries, right around the world went backwards and went into deep recession. Australia was alone amongst the developed world; only one other country that didn’t experience a deep recession during the Great Recession.
GILBERT: As you heard from the Finance Minister, and many, many times before over subsequent years, that they say that simply you spent too much in the two stimulus phases and that the recession could have been avoided without all of that, and the other thing that underpins their argument is that they say it wasn’t just the Costello management of the budget which got us there in the first place but also the strength of China.
SWAN: Well that’s just dishonest and it’s delusional. It’s not a view that is shared by the current head of the Prime Minister’s department. It’s not a view that is shared by Treasury. It’s not a view that is shared by the International Monetary Fund. And it’s generally not a view that’s shared by the business community in Australia as well. He’s conflated a whole series of events. The truth is that at the end of 2008 and 2009 the global economy was looking down the barrel of the Great Depression Mark II. Here in Australia, we put in place the best targeted and most effective stimulus package outside of China, which was a tremendous boost to our economy, and it meant that our unemployment didn’t go through the roof, like it did in the United States and like it did around the rest of the world. And the consequence of that has been a far healthier, much more robust Australian economy over the last decade. And the key reason for that is we avoided the capital destruction and the skill destruction that occurred right across the rest of the developed world. And it’s simply delusional and dangerous for a senior Minister, in a Finance portfolio to make those grossly inaccurate statements. Because what it says to me is that is there is another event, another global event, we have a government in Canberra that would sit on their hands, not respond and expose the Australian people to the power of recession.
GILBERT: And one of the things, I guess, history repeating itself at the moment with the strong economy, the government’s just dumped a leader. As you reflect on the events of those days, was that one of the critical flaws in dumping Rudd? Because you were also basically saying that the government had lost its way, you basically dumped the legacy of the GFC as well, and navigating it, which was the then-government’s biggest achievement, Mr Swan?
SWAN: Well we didn’t. In fact, we continued with the same economic approach under Prime Minister Gillard that we did under Prime Minister Rudd. And the consequence of that has been a very strong Australian economy for the last decade. I’m proud of our record, Mr Rudd is proud of our record, our whole government is proud of the record during that period in office.
GILBERT: Could you have spent less though? That’s the fundamental question when conservatives and others attack your time as Treasurer.
SWAN: Look, we spent the right amount of money. It wasn’t only just stimulating our economy through the end of 2008 and 2009. What the government forgets is that, through 2010 and 2011, the world was still being hit with the aftershocks of the Global Financial Crisis. And of course they were still impacting on our economy. One of the reasons why our economy is now 30 per cent larger than it was at the end of 2007 is our stewardship not just through 2008 and 2009, but through that period 2010 to 2013, when there were shocks coming from the GFC continuously hitting our economy. Yes, through the latter part of that period, we had a mining boom. But the world economy was not a healthy place during our period in office. This government has got the advantage of the global economy being much stronger. But for our period in office, we were battling the headwinds of a very unhealthy global economy, particularly in developed economies like the United States.
GILBERT: Well it’s certainly an achievement of both sides of politics — 27 years of uninterrupted growth in this country; extraordinary, given some of the political turbulence we’ve had. But Mr Swan, I appreciate your time. Thank you; talk to you soon.
SWAN: Thank you.
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Authorised by Noah Carroll, ALP, Canberra.