The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

31 July 2009

NO.019

Responding to the Global Recession

Address to the ALP National Conference Fringe Event: Responding to the Global Recession

Sydney

31 July 2009

First of all, thank you very much for inviting me to be a part of this panel.

My diary being what it is, I don't often get the chance to be part of more theoretical discussions about politics.

And I'd like to get to that in a minute, to satisfy – if you like – the requirement to bring some theory to this discussion. It's a BYO theory event, I know, and being an obliging sort of guy, I've brought a bit.

But if theory is the fine wine of this discussion, I wanted to start with beer – namely a few reflections from a serving politician and Minister about the responses I have seen from our people during this crisis.

In the time since Parliament rose – and you might recall it was a nice, calm end to the session for me, so I was fresh to begin with – I have been travelling around the country. I've done two Community Cabinet meetings – in South Australia (Elizabeth) and in Queensland (Beenleigh). I've also done a few days through Wollongong, Grafton and Lismore. And even had a few days in my electorate.

What unites all these places is their position in the first rank of communities affected by the global recession washing upon our shores.

Now I could tell you scores of the stories I have brought back, and in any honest account, they would be pretty positive about the actions we have taken to stimulate the economy and otherwise guard against the onset of the global recession.

But I'm figuring you'll find that self-congratulatory and dull. So I don't want to talk about the figures or even the individual stories. I want to talk about the impact of confidence on an economy and its people.

And I want to do this, because I think it says something about the progressive response to this crisis.

Put simply, as at least one economist has said recently, our stimulus packages and other policies have added up to be more than the sum of their parts. All the elements put together have given our people something more than just money or even the tangible building activity they can see in their communities.

They have given people confidence that they are not alone in facing this crisis. Their Government is with them, but not just that. The response has been one from the nation as a whole. Policies have quite deliberately engaged individuals, families, small business, bigger business, the construction industry, school communities, the list goes on.

We wanted a national reach for our policies, because we wanted everyone focused on keeping activity and jobs going. And remarkably, we got it.

Even more remarkably, we got that national resonance after we have all been told for many years that ours was a more individualistic age. I know David [Coats] and his colleagues have been pondering whether this global recession would be a progressive moment. I haven't had the time to think about that too much, but it has been a progressive response from the Australian community.

I've always said Australians know we live in a community, not a corporation. And this response has proved it.

It's been a progressive response in the sense that the Australian people have very clearly supported Government intervention to correct a terrible market failure.

This is the point at which I'd like to move from the beer of retail politics onto the wine of political theory, and just a few thoughts.

There are three competing narratives about causes.

The first sees the Global Financial Crisis solely as a failure in government regulation.

The second expands that out into a failure of the neoliberal economic framework itself.

And the third flows from this, namely the role of consumerism and individual behaviour.

I'm not going to spend time on the argument that this was just a failure of regulation. I think it deliberately ignores the implications of this crisis for the global economic system, and is inadequate to explain the responses needed.

The second narrative sees the Global Financial Crisis, at heart, as the failure of free market fundamentalism.

Fundamentalism has its followers because it's simple. Simplicity can be attractive – and I'm drawing here on an excellent recent article in the Economist about the crisis in macroeconomics – this being the hot tip for this summer's barbecue stopper in back yards all around Australia.

Making government economic policy and regulation is complex. Just saying "remove it" is simple, or rather simplistic.

Similarly, as we are seeing today, the Coalition's advocacy of the line 'government debt is bad' is simple.

It is more complex to argue as this Government has done – that sometimes government debt is necessary (as it is now), and at other times it is our responsibility to pay it down (as it will be once the crisis is over).

Again, it might be easy for the Coalition to point to better growth predictions for Australia, claim that the crisis is over and advocate the roll back of stimulus.

It is harder to tell the more complex story of recovery where we should expect unemployment to lag as it has after other economic crises, peaking on average a year after growth turns positive.

The convenience of such fundamentalism is a cop-out from taking up the harder task of governing pragmatically for the long term: a task which involves justifying the hard decisions.

The neo liberal approach also fundamentally underestimates the people. Just as Paul Krugman has recently argued that President Obama needs to retake control of the economic policy debate by 'talking to Americans like adults', in Australia, the efforts by this Government, especially by the Prime Minister in his two recent essays, reflects our desire to take the Australian people with us in the complexities of economic recovery.

This leads me into discussing the third narrative about the Global Financial Crisis, which is the story of consumers themselves. A broader conversation is opening up about the culture that underpinned ever-higher private debt underlying the financial crisis.

Amitai Etzioni, a leading American sociologist, argues that the deeper social disease is consumerism itself. Consumerism is not the same thing as capitalism, nor is it the same thing as consumption. Rather it arises when the acquisition of goods and services is elevated beyond basic needs to become a defining characteristic of a person or a class of people.

This idea got me thinking about how differently we have responded in Australia to this crisis, and takes me back to where I started my remarks.

Instead of selfish behaviour, we have seen great concern for the welfare of others, particularly in workplaces where employers have bent over backwards to keep their employees in work, and the way workers have been prepared to make sacrifices to help their colleagues keep their jobs.

I've been really proud to see this as I have travelled around the country. I think it says something terrific about us as Australians, and the spirit of community we may have feared lost during the Howard years.

I talked in my book "Postcodes" about a moment I found emblematic of our recent political history. It was a bloke I saw a few years back wearing a T-shirt which said: "Greed is good. Trample the weak. Hurdle the dead."

We had started to develop a political culture, I think, which said that change is good as long as it's not you having to change. And you don't have to worry about the losers from change, again, as long as it isn't you.

That culture was no accident. It was the product of hard political work by conservatives to stitch together coalitions of resentment and fear. Coalitions they knew they needed to deal with the consequences of economic policies producing a rising tide of inequality.

The point always was that if you removed those economic policies – or a great crisis removed them for you – you could remove the political culture sustaining them. And I think that's what we're seeing now.

Thanks for having me, and I look forward to the discussion.