TO be frank, I am absolutely thrilled to be mentioned, albeit in an unflattering way, in Wayne Swan’s latest book. I clearly got under his skin during his time as a failed and deluded federal treasurer.
The book is entitled The Good Fight: Six Years, Two Prime Ministers and Staring down the Great Recession.
A more appropriate title would be Blowing the Budget: A Guide to Bad Policy and Wasteful Spending.
I’m not sure what takes hold of someone in Swan’s position, apart from spare time, to write a book about his ignominious years as federal treasurer. He would have been better served to leave the topic alone.
Judged by the extracts published last week, he has learned nothing from those humiliating years and still has no grasp of basic economic facts. In short, it is an embarrassment.
But even leaving aside his ongoing economic illiteracy, the really bizarre aspect of the book is his willingness to blame everyone else for Labor’s various policy disasters, including uncooperative, wealthy businesspeople pursuing their self-interest, commentators at News Corp (publisher of The Australian) and, of course, Kevin Rudd. Nothing to do with him.
Throw in his message about class warfare and a teenage-like, **bleep**-for-tat approach to policymaking and that pretty much sums up Swan’s disastrous time as treasurer.
Take his interpretation of the mining tax. According to Swan, the problems were twofold: “We were too ambitious and we were unprepared for the backlash from the vested interests who wanted to kill off the tax.”
But reading through his explanation of why the tax failed, it is clear he still doesn’t have the faintest clue about how the tax would work or how it would interact with state mineral royalties.
He mentions, for instance, the petroleum resource rent tax, which is levied at a nominal rate of 40 per cent. What he doesn’t mention is that no state royalties apply to offshore petroleum and gas resources, and the PRRT replaced a very messy and burdensome federal government levy. Moreover, the PRRT was introduced only after a lengthy period of consultation with the companies that would pay the tax.
One of the most depressing aspects of Swan’s narrative relates to his avowed intent to split companies into two camps: non-resources companies that would publicly endorse the mining tax in exchange for a lower company tax rate, and resources companies that would selfishly oppose it.
But “the non-mining sectors sat on their hands. Too many businesses were dependent on miners for work and too many leading businesspeople eyed jobs on boards of mining companies.” Is he kidding?
Then we have this clanger: “What really riled me was the claim (of the mining companies) that they should really only have to pay the company tax rates. Given that corporate tax applies to every company, by saying this miners were effectively arguing we should hand them our resources for free!”
This is just wilful ignorance on Swan’s part. Mining companies pay royalties to state governments and, in many instances, also pay for exploration rights. Both the West Australian and Queensland governments increased the rates of mineral royalties during the course of the commodity price boom.
There is no sense in which the mining companies are handed our (the states’, actually) resources for free. And quoting discredited figures from a student thesis on the rate of tax that mining companies pay in Australia just demonstrates that Swan learned nothing as treasurer.
Further highlighting his complete lack of understanding of the crucial role of business in the Australian economy is Swan’s analysis of the 2012 budget; you know, the one in which his (unintentionally hilarious) speech started: “The four years of surpluses I announce tonight are a powerful endorsement of the strength of our economy, resilience of our people, and success of our policies.”
Swan writes unconvincingly that “I was attracted to the idea of reducing the company tax burden. I saw nothing against such a cut as long as the cost of the reform fell on those able to pay. But the Business Tax Working Group, reflecting the position of the BCA, wanted a big tax cut for business to be paid for by increasing the rate or broadening the base of the GST, rather than cracking down on the overly generous business tax concessions.”
But here’s the thing, Swanny. The BTWG did not release its report until November 2012 and there is no mention in it of increasing the rate of the GST.
And here’s another thing. The main case for lowering the rate of company tax is to attract new investment, to lift productivity and to raise real wages. Yes — higher real wages, something that you might have thought the Australian Workers Union-aligned Swan might support.
But let me finish by returning to the 2010 budget and the fantasy world Swan lived in, even at that early stage. “It was Friday, May 14, 2010, three days after I had delivered the budget, and we were about to embark on the traditional budget roadshow … I had received some praise because, on the whole, the budget had been well received for the impressive fiscal consolidation it set out.”
He even mentions Laura Tingle of The Australian Financial Review giving him a pat on the back. It was not just Rudd who was needy when it came to seeking praise. But impressive fiscal consolidation? Is this some sort of joke?
Swan’s fiscal record as treasurer amounted to cumulative deficits of more than $200 billion and net government debt increasing by more than 100 per cent.
As the saying goes, you don’t have to have a long neck to be a goose.
