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%.
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.