Australian Labor Treasurer, Wayne Swan has been voted Euromoney Magazine Finance Minister of the Year. Let’s take a moment to recap on previous Euromoney award winners and where they are today:
Euromoney 2006 Best Investment Bank – Lehman Brothers (Busted 2007).
Euromoney 2006 Best Equity House – Morgan Stanley (Bailed out 2007).
Euromoney 2006 Best at Risk Management – Bear Stearns (Busted 2007).
Euromoney 2006 Best at Investor Services – Citigroup (Bailed out 2007).
And I’d like to note the favourable Euromoney commentary on AIG’s future, 2007 (bailed out 2007).
Let’s hope the Treasurer is honorable enough to accept that this award is primarily for Australia and not for him. The reason for the award is because of Australia’s ability to ride the GFC better than most western nations. The reason Australia was able to do this was because of the treasurers who went before him. Paul Keating for floating the Australian dollar and deregulation of the financial sector. Peter Costello for the introduction of GST, freeing up of labour markets and strong prudential regulation.
As The Australian newspaper editorilised today, “Mr Swan can claim credit for recognising the threat of the global financial crisis and responding quickly, particularly through cash injections, to stave off recession. However, much of the later rounds of stimulus spending was ill-targeted, poorly administered and unproductive. The resources boom, fueled by continued Chinese demand, the rapid depreciation of the dollar via our floating currency and the aggressive easing of monetary policy by the Reserve Bank, as well as the stability of our financial sector, insulated us from the worst of the crisis.”
The stimulus spending would not have been possible if Peter Costello had not left so much money in the bank for Wayne Swan to spend. Of course, the next Treasurer will not be so lucky as to have a budget surplus as Wayne Swan has left the coffers deeply in debt!
So, let’s hope Wayne Swan can do a better job than previous award winners, for the sake of Australia and our children’s future!
UPDATE - 22 Sep 2011
When John Howard won office in 1996 he inherited debt of over $96 billion from the Hawke/Keating governments!
Under Whitlam average inflation was above 12%. Under Hawke average inflation was above 6%. Under Keating and then Howard average inflation was only 2%.
Inflation for each government
During the Howard Government’s fourth term over 855,000 new jobs were created, unemployment declined to just over 4% and inflation generally remained within the Reserve Bank of Australia’s (RBA’s) target range of 2–3 percent. The Government also completed repaying the Commonwealth’s debt and recorded surpluses in each of its budgets during the term.
Australia’s strong economic performance was largely attributed to the reforms made by both the Hawke-Keating Government and Howard Government and the growth in the world economy over the same period.
Changes to fiscal policy introduced in the 2004–05 budget included a ‘baby bonus’, increased tax benefits for families with children, and lower income tax rates for all Australians. The family benefits introduced by the Howard Government led to middle-income households becoming the largest single group of social welfare recipients. The superannuation system was also changed in 2007 to allow most people to withdraw their superannuation tax-free after they reached the age of 60 and to increase incentives for semi-retired people to work part-time.
Once the Commonwealth debt was repaid, the Government used its financial surplus to establish a ‘Future Fund’ to pay its superannuation liabilities and a Higher Education Endowment Fund was established in the 2006–07 Budget. The Government also negotiated and signed several free trade agreements between 2004 and 2007, including one with the United States which had been mostly negotiated during the third term.
Between the Labor Government and the self absorbed employer associations I suspect our children will struggle if something decisive is not done, and done quickly.
Hi Ric, actually, Australia was in structural deficit in 2007, with earnings falling behind spending. There wasn’t really a ‘surplus’ to speak of. The interesting thing to note is the differences in economic models used by each major party – Labor adopting Keynesian theories, utilising debt for investment and future ROIs (hence the claim of a surplus in 2013-2014), and the Coalition utilising conservative economic theories where a ‘surplus’ comes from spending cuts and selling of assets (Telstra for one). Unfortunately, Australia was unprepared for any sort of financial crises in 2007 simply because middle class welfare, and the inflation-inducing first home buyers grants overheated an unprepared economy. My take is that we will be paying for Costello’s grievous economic errors for many years to come.
When John Howard won office in 1996 he inherited debt of over $96 billion from the Hawke/Keating governments!
Under Whitlam average inflation was above 12%. Under Hawke average inflation was above 6%. Under Keating and then Howard average inflation was only 2%.
During the Howard Government’s fourth term over 855,000 new jobs were created, unemployment declined to just over 4% and inflation generally remained within the Reserve Bank of Australia’s (RBA’s) target range of 2–3 percent. The Government also completed repaying the Commonwealth’s debt and recorded surpluses in each of its budgets during the term.
Australia’s strong economic performance was largely attributed to the reforms made by both the Hawke-Keating Government and Howard Government and the growth in the world economy over the same period.
Changes to fiscal policy introduced in the 2004–05 budget included a ‘baby bonus’, increased tax benefits for families with children, and lower income tax rates for all Australians. The family benefits introduced by the Howard Government led to middle-income households becoming the largest single group of social welfare recipients. The superannuation system was also changed in 2007 to allow most people to withdraw their superannuation tax-free after they reached the age of 60 and to increase incentives for semi-retired people to work part-time.
Once the Commonwealth debt was repaid, the Government used its financial surplus to establish a ‘Future Fund’ to pay its superannuation liabilities and a Higher Education Endowment Fund was established in the 2006–07 Budget. The Government also negotiated and signed several free trade agreements between 2004 and 2007, including one with the United States which had been mostly negotiated during the third term.
As for selling assets: the Bligh Labor government has done a sensational job at selling everything that it possibly can. There’s not much left here in Queensland that hasn’t been sold. And, Queensland has the worst economy and we have lost our AAA rating thanks to the Bligh Labor government and the Treasurer, Andrew Fraser.
Hi Ric,
Just a couple of things: inflation was low under Howard for a portion of his tenure, but was increasing steadily up to the 2007 election, with interest rates the highest (peaking at around 8.75% in late 2007, just before the election). Interestingly, even though we didn’t have the 18%-ish rates like in the 80′s, the debt serviceability under Howard was the weakest ever, with around 23% of incomes deployed to mortgages. This has dropped to around 20%.
Unemployment was just above 4% under Rudd. Under Howard, it was steady around 5.5-6%. Howard was also one of the highest taxing governments, with it being over 24% of GDP, as opposed to 21% now, whilst GDP under Howard was quite OK, it has increased by around 10-15% from Howard’s days under Rudd / Gillard. Additionally, household saving collapsed under Howard to around 2%. It has increased to around 6% under Swan.
The concepts of middle-class welfare instigated under Howard is confusing. It was a highly inflationary policy, apart from putting more money into the pockets of those who, let’s be honest, may not have needed it, the social ramifications are widespread. We are now a very self-centred country, demanding government handouts at every step. Howard’s policy of ill-directed handouts saw real prices increase significantly. The HEEF was a crafty move, which simply put a portion of the billions taken away from the Higher Education sector over the previous 10 years. With the removal of funding, the voluntary student unionism and vetos of research projects, uni’s are still suffering as a result. The HEEF was merely a token gesture.
The selling of assets is interesting…and QR, amongst others, seems to have boosted the state’s coffers, but, I’m unsure why it happened. When Howard sold Telstra, again there was seemingly no need to do so – apart from satisfying conservative economic theories…and their proposition to sell Medibank Private was equally confusing.
The Free Trade agreement with the US was probably the most ill-conceived agreement ever negotiated. Not one element there is for the benefit of Australia. All the proposals Howard wanted in there – access to American markets by Australian business, exporting agricultural products and a percentage of manufacturing exports all were watered down or removed. It was a weak moment for the then-government.
I still contend that Howard and Costello sat on their hands and didn’t go the full extent of reforms demanded of them. Australia was very unprepared for the GFC, and I attribute a lot of that to the previous Liberal government.
Calling the current federal government the worst in Australia’s history is a tough call but consider the evidence:
• It couldn’t put pink batts into people’s roofs without starting fires.
• It couldn’t build school halls without rip-off after rip-off.
• It couldn’t manage a $4.7 billion broadband tender so it committed to a $43 billion National Broadband Network drawn up on the back of an envelope on a plane because that was the only way the minister could see the prime minister.
• It ran up the biggest budget deficit in Australia’s history despite the best terms of trade in Australia’s history and is still accumulating debt at the rate of more than $100 million a day.
• It closed down the live cattle trade because it panicked in the face of a TV programme.
• It’s closing down the Tasmanian forestry industry because that’s the price of governing with the Greens.
• It closed down the Nauru detention centre and, 240 boats and 12,000 illegal arrivals later, finally declares that offshore processing is absolutely necessary and that it’s the opposition’s job to make it happen!
• It’s given Australia a sovereign risk problem for the first time ever by announcing punitive new taxes without serious consultation with the people affected.
• It thinks that the best way to reduce carbon dioxide emissions is to raise everyone’s cost of living with a carbon tax eventually increasing to $131 a tonne.
Sure, Australia is still a great country but that’s because there are some things that not even this government has yet damaged.
No wonder it’s a government that’s slowly dying of shame at its own incompetence.
The Labor Party is here to represent and look after the best interests of the lower and working classes, including struggling pensioners, which make the majority of his supporters in his electorate.
How many of them can afford this type of malfeasance and abuse of taxpayer funds?
Newspaper reports on Thursday said Mr Rudd had been instructed to cut his travel expenses after the estimated cost of one trip came to $77,000.
In particular, the cost of a hotel suite in Sweden for one night was estimated to be more than $1700, News Limited reported on Thursday.