Why history could be kind to Wayne Swan: Kohler

Last week’s budget had its faults, no doubt about that, but there’s actually a lot to like about Wayne Swan. If he stays the course that’s been set, history could be very kind to the Treasurer and Deputy Prime Minister.

There are four things for which he should be remembered well:

1. Australia’s lack of a recession in 2008-09;

2. 1% a year growth in government spending (if the projections in last week’s budget hold);

3. Not doing anything radical;

4. Not trying to be Prime Minister.

The last of these should go down as his greatest achievement. In our experience, and many other countries’, treasurers typically undermine their leaders and try to steal their jobs.

John Howard relentlessly coveted the top job, although he didn’t openly undermine Malcolm Fraser; Paul Keating did undermine Bob Hawke and eventually forced him out; Peter Costello spent years in an agony of indecisive ambition – a constant distraction.

When Kevin Rudd tumbled in the polls last year and was eventually sacked, there were never any stories about Wayne Swan counting the numbers. He was not even in the frame.

Now that Julia Gillard is PM and also in trouble in the polls, once again the Treasurer, and Deputy PM, is entirely loyal. There are no stories about Swan wanting to be PM; no reference to a “Swan camp”.

You might think a lack of ambition is not much of a thing to be remembered for, but I disagree. All politicians are ambitious at heart, and although I haven’t discussed this with Wayne Swan, we can only assume he is both realistic about his chances and deliberately loyal.

This is a pretty valuable gift to the ALP: the party has enough problems without the distraction of leadership wrangles like those that dogged both the Hawke and Howard Governments.

The other three elephant stamps on Wayne Swan’s report card are perhaps controversial.

In 2005 he published a book called Postcode: the splintering of a nation, a pretty standard Left polemic about the growing inequality of income.

Last week’s budget was said by his close advisers to have been 10 years in the making; one of them told me: “the intellectual playbook for the Treasurer’s fourth budget is contained in his 2005 opus Postcode: the splintering of a nation.”

“It’s where Swan explained how economic growth had left behind people in pockets of disadvantage and where he first articulated the notion of a patchwork economy.”

Politicians who write books and harbour ideological passions are dangerous creatures. If he really had been preparing last week’s budget for 10 years, it could have been an absolute shocker – a radical attempt at income redistribution.

In the event he just removed indexation from welfare payments to families on more than $150,000 a year. That was ludicrously described by the leader of the Opposition as class warfare, but it may have been a bullet dodged.

The fiscal stimulus over which Swan presided in 2008-09 was arguably too great and poorly targeted, but it is unarguable that Australia did not have a recession while the rest of the west did. Obviously China’s continuing demand for raw materials contributed as well, but the series of fast decisions in Swan’s portfolio in 2008 were undoubtedly important in keeping thousands of Australians in work.

This morning’s The Australian contains an analysis by George Megalogenis of government spending growth under various treasurers since John Howard in 1978-79, which shows that if the projections in last week’s budget come to pass Swan will be the lowest-spending treasurer, with 1% per annum.

That’s a big if. Spending growth in 2008-09 was 12.7%; in 2009-10, 4.2%. But those were special times (see point one above).

According to George Megalogenis, average annual spending growth under Treasurer John Howard was 2.3%, under Paul Keating it was 2.2%, in Peter Costello’s first four budgets, spending growth was 1.9% and in the last seven budgets it was 3.3%.

Wayne Swan’s budget projection of 1% annual growth in spending is ambitious, it’s true, but at least that’s where his ambition is directed, not towards getting the top job.

This article first appeared on Business Spectator.