An interview with Wayne Swan

I had the opportunity of chatting with Labour MP Wayne Swan about his book 'The Good Fight' on The Arts Show. Below is the transcript from our interview.

Wayne Swan - 8 September 2014, The Arts Show

The following program is produced in the studios of 100.7 Highlands FM.

A: Well good afternoon listeners and welcome to the Arts Show on Highlands FM. My name is Alex McCulloch and our first guest this week is Wayne Swan the Federal Member for Lilley. Welcome to the show Wayne.

WS: Hi, good to be with you.

A: Thank you. Now, at the press club address recently on the launch of your new book, ‘The Good Fight’, you noted, “The Good Fight is about how Labour defeated the Global financial crisis, how our minority Labour government implemented a progressive reform agenda, but was then defeated by internal disunity, ably assisted by some very very powerful vested interests.” Did you mean to imply that the internal disunity was in any way connected with the powerful vested interests?

WS: No, not at all. But let’s put the cart before the horse, or the horse...sorry… the cart after the horse. But, no not really. Essentially, we spent the first three years fighting the Global Financial crisis. We did that very successfully with a first class response, we were the only developed economy that didn’t go into recession and for that both Kevin Rudd and I, and a number of other members of the cabinet, worked very effectively together. But, as time went on and we got towards the next election, there became a deal of disatisfaction internally with the Prime Minister. And as you know the leadership changed just before the 2010 election. It was that disunity that followed that election that I think emboldened many vested interests to take a very aggressive stance towards against the minority government of Julia Gillard. Vested interested that resented what we had done to replace Work Choices with the Fair Work Act, vested interests that didn’t want to support carbon pricing, vested interests that didn’t want to support resource rent taxation? So that’s the story that’s told in ‘The Good Fight’ because these powerful forces are still very much at work and they’re wanting to remake our country and to get rid of the Australian model. They want to attack our wage system, they want to bring down the minimum wage, they want to get rid of collective bargaining, they don’t support the Gonski recommendation, they don’t support carbon pricing and they most certainly don’t support resource rent taxation. And that’s the sort of agenda which is dominated by the Audit Commision report appointed by the Abbott government and run by Mr Shepherd from the Business Council. So there’s a powerful array of forces, which are currently running the Abbott government, very hostile to fair industrial relation systems and universal health and education.

A: In the book you mention about the kind of American style inequality in a shrinking middle class. What are the implications in Australia for a shrinking middle class.

WS: Well Australia’s done better than just about any other developed economy this century, but most particularly… or last century and through this century… most particularly since the global financial crisis, mixing if you like strong economic growth with good social equitable outcomes. So we have a broad middle class and the way in which it has been shrinking, particularly in the United States, but elsewhere in the developed world, particularly on the back of high unemployment and the withdrawal of universal health and educational services for average people. The middle class has been completely hired out in the United States. And, in fact, in the United States, the debate there is how they can move towards an Australian money with a decent level minimum wage and where there is quality, accessible, affordable health and education. So that’s the kind of model that’s being pushed by the Abbott government and their audit commision and it’s one that the vested interests have favoured because what they want to do is shift the tax burden from corporate back to individuals via an increase in the GST.

A: Could you explain how growing inequality, particularly inter-generational inequality, lays at the core of the Abbott government?

WS: Oh very much so. The proposals they’re putting forward for unemployment benefits, time limited benefits. The changes to tertiary education are just horrendous in terms of average people from ordinary backgrounds ever even anticipating or wondering whether they’d try and get a tertiary education, so they will just now see that as completely unaffordable. What they’re doing in healthcare… the fundamental part of the Australian settlement or the Australian way is that people can anticipate to have their health and education needs looked after in the public sector. When that starts to be withdrawn, that’s what promotes inequality for the long-term, particularly for young people coming through who won’t necessarily have access to the affordable education that this generation and generations before us had.

A: I actually watched your maiden speech in parliament from 20 years ago, which was interesting and you mentioned how you’d been through the Whitlam government, you’d received education. Could you ever imagine the country would go down this track?

WS: I’d never imagined the Liberals would pull on the caper they have with tertiary education. The proposals from Christopher Pyne… I regard those proposals as intergenerational warfare against generations of young Australians that are coming after people like me, because I’m a baby boomer. It is fundamentally unfair and it is going to alter our country for the worst and it will do it for a long time.

A: What do you think were the most important aspects of Labour’s successful economic policy that created enduring social reforms.

WS: Well, our economy grew by 15% between the end of 2007 right through to the government’s defeat and that has brought with it almost one million new jobs. So, the benefit of that for Australia has been enormous - good income growth in a situation where we’ve got a fair industrial relations system. That’s what promotes social mobility, particularly with affordable access to health and education. All of those things are now under challenge by both the Abbott government and it’s Audit Commission and that will produce greater inequality as time goes on.

A: What are your arguments against the conservative view that during the global crisis that a laissez-faire approach would have seen us through the crisis?

WS: Well, quite clearly, if the government didn’t intervene Australia would have experienced the mass unemployment and the destruction and bankruptcies of businesses that occurred elsewhere in the developed world right across Europe and across the United States. That we didn’t experience that meant that Australia remained fairer and more prosperous than just about any other developed economy in the world. And that’s a view which is shared by all the leading international economic agencies and the private sector market economists that sit back and look at the progress of the Australian economy during this period and marvel at it and say that the Australian response to the global financial crisis was the most successful of any developed economy in the world.

A: Post-GFC you were committed to policy settings required to support growth in a post-GFC world. These included the carbon pollution scheme, health reform, at that stage the unknown recommendations of the Henry Tax Review. Which of these proved most problematic for your government and why?

WS: Well, carbon pricing was always a big, tough, hard reform but we put in place a compensation package to assist people who were affected by price rises. But it also produced a very substantial reduction in carbon pollution emissions. So that was actually quite successful until it was knocked off and it’s ironic that as we remove our carbon price, the rest of the world is putting one in place. Most notably China, which is about to move, I think, to a full emissions trading scheme or carbon pricing across their whole economy. It’s a shame that that is gone, because Australia will be revisiting that in one form or another in the future from a government of either persuasion because it’s an economic necessity. But what we’ve done, particularly with the NDIS, a big reform program, fully funded and put in place by Julia Gillard and the Labour government, that still endures. Although, I think the conservatives really want to rip it out, so we’ll have to see what happens to that. What we’ve done in funding tertiary education, very substantial increases there, paid parental leave - all of those issues. The increase in the base rate of the aged pension, which is about to be hacked away by the Abbott government through changes to indexation, they’re all fundamental and enduring reforms.

A: In your own words, you had the best performing advanced economy in the world, despite the substantial increase in the pension, despite legislating fairer workplace laws, despite record investment in education and skills and despite cutting income taxes three times. Why did you come so close to losing the election in 2010?

WS: Well, basically because of internal disunity and the sabotage that went on in the 2010 election campaign. And I got through that in some detail in the book. And of course that led to the minority government. We’ll never know what a majority Gillard-Labour government would have looked like if it hadn’t been for the sabotage that occurred in that 2010 election campaign.

A: What do you think it would have looked like?

WS: Well, I think it would have looked like a government that was putting in place the big reforms with the full support, or a majority if you like, of the Lower House. And it would have been much easier and those vested interests would have been much more restrained in trying to wield their power.

A: You said at the press club also that there has been in times a vigorous public debate about the challenges facing the budget and there is one misrepresentation that cannot be allowed to stand, namely the fiscal difficulties faced by our government, or indeed by the Abbott government, are a spending problem not a revenue problem. You referred to this as the ‘Great Lie’, could you elaborate on this ‘Great Lie’?

WS: Yes, certainly. I mean spending as a proportion of GDP is about average levels, they’ve been for a long time under both sides of government. What has occurred, and why we have deficits, is revenue has dropped unexpectedly and repeatedly. This is a substantial problem and one which the Abbott government won’t own up to. The fact is that it is a revenue issue and in fact they’ve continued to spend on their own priorities. I mean how they could claim to be against entitlement then put in place their… or want to put in place their paid parental leave scheme, which is one of the most expensive entitlement programs in the history of the country, just shows that they don’t really believe their own rhetoric when it comes to practice. The fact is that revenue is dropping off, the consequence of things like a higher dollar, but also big loopholes in the system, which we were trying to close, and they’ve now abolished the measures that we put in place in our last budget to stop multinational companies moving their profits offshore. So, what they then do to get out of that problem is, if you like, diagnose our challenge. Our challenge is in revenue and that’s what they want to be attending to, most particularly to stop this profit shifting from ripping away government revenue here and people locating their profits in other countries.

A: Why do you think your announcement to put in place a green energy package unleashed a terrible anti-Gillard, anti-Labour mob mentality?

WS: Well, it was characterised almost immediately as a carbon tax even though it’s an emissions trading scheme with a fixed price, something that the Liberals had actually supported only a relatively short period of time before. In fact, Tony Abbott had been on the record supporting what he called a carbon tax. So, it was the position of minority government that emboldened many of those vested interests and the negative approach of the Liberal party that did lead to that mob mentality, all of those rallies outside Parliament House and the way in which Julia Gillard was personally and vehemently attacked by a whole range of interests.

A: You speak of capitalism as facing an existential change. It is you say depressing but predictable. Are you saying that capitalism as we know it is dying? Or that it is demanding a creative innovation that would include creating new values that are different from ones usually associated with capitalism?

WS: Well bodies as diverse as the Bank of England and the International Monetary Fund have made those comments that you’re quoting me as saying. This is a common discussion in the international economy at the moment. And the first fact in the developed economy, the product of growth has been increasingly concentrated in the hands of the few at the top. Increasing a dramatic concentration in the top five, three, two and one per cent of the population. So, there’s a real discussion about how we have a more inclusive form of capitalism where growth is more fairly shared. Because what people are saying is that when wealth concentrates so much at the top, not only is it unfair, but it’s a handbrake on growth in the economy because you hollow out the middle class and therefore you don’t have that broad group of consumers who drive economic growth operating the way it used to in capitalist economy. That’s the phenomenon that these commentators are talking about when they talk about the crisis faced in capitalist society. A crisis we haven’t faced in this country, principally because of the actions of Labour government putting in place fairness while we grow.

A: You argue that one of Australia’s greatest achievements of the 20th century was the creation of a truly middle class society. What exactly do you mean by this?

WS: Well fairness in Australia. We’ve always had a much fairer distribution of income across low and middle income earners and we’ve avoided the big disparities of inequalities that you’ve seen in societies like the United States. That’s precisely the contrast. And it’s just ironic that as the United States tries to move to a model more like Australia, our new conservative Prime Minister points to the American model as the way that he wants to go of greater inequality and concentration of wealth at the top and a larger group of working poor.

A: Do you see evidence that Australia is becoming an alienated people and angry and revolting against these new ideas and new policies by the Abbott government?

WS: No, well I see a lot of dissatisfaction and revolt in that the approach of the Abbott government... but, I hope that that is all targeted into the next election campaign where people vote against the government that gave them a set of policies that they denied prior to the election they would implement.

A: Is it increasingly difficult to identify the enemy?

WS: Well, I’m not sure what you mean by that, but I don’t like to divide our Australian society. It’s Mr Abbott and Mr Hockey that are dividing society by describing our people as divided between listeners and leaders. I like to think that it’s the things we do together that make us strong, that we could have a much more cooperative approach and a collective approach to making Australia a better place and a more prosperous and fairer society. Division rhetoric is something that comes from the government every day of the week and it’s something that literally makes me sick when I listen to it in the Parliament.

A: I couldn’t agree more. Who do you want to read your book and what do you hope to achieve from writing it?

WS: Well, to highlight the issues which go to the core of what sort of society we want to be as we move through this century. So, I hope I’ve demonstrated a powerful case for a society and an economy where we have a fairness at its core and we recognize that fairness is actually the process which brings about more prosperity and that unfair societies are not necessarily wealthy societies, they’re just concentrated societies.

A: Wayne, thank you so much for joining us today, I really appreciate it. The book’s fantastic. It can be bought at all good bookstores and we wish you all the best for the next election.

WS: Thanks very much.

A: Thank you Wayne. Bye.