Though he doesn’t forgive the Coalition’s attacks and years-long dismissal of his own efforts to save Australia’s economy during the global financial crisis, Swan described the current government’s third, massive stimulus package as justified and necessary as the coronavirus pandemic swept across the world.
He called it the Coalition’s “getting of wisdom”.
“It has my total support,” he said.
The reason for his support, he said, was the same as his reasoning behind the decision to pour stimulus into the economy in 2008: he could not abide the thought of Australians struggling through another Great Depression.
Swan, the Treasurer in the Rudd and Gillard governments from 2007 to 2013, oversaw a $42 billion stimulus package – following an initial $10.4 billion mail-out of cheques – as the financial crisis gripped the world.
Until a few weeks ago, leading figures in the Liberal Party argued Labor’s second stimulus was excessive and unnecessary, even though Australia emerged from the economic crisis as the only developed nation in the world that avoided recession.
Worth about $80 billion in today’s money, it was the biggest single stimulus package in Australia’s history until the Morrison government announced at the end of March this year its $130 billion job-support plan as the coronavirus emergency closed down the nation’s businesses.
With economists now predicting the worst economic slump since the Great Depression of the 1930s, Swan recalled that it was the haunting effects of the Great Depression in his own family’s history that drove him to support unprecedented stimulus in 2008.
His grandfather, gassed on the Western Front in the First World War, had moved his family on to a soldier settler’s farm at Amiens in Queensland after the war. The Great Depression had “starved the family off the farm”, Swan said.
Labor Prime Minister James Scullin and his treasurer Ted Theodore had mismanaged the chance of recovery. Up to a third of Australia’s workers were driven into unemployment.
Swan’s father later joined the RAAF and fought in Borneo in World War 2, and “wasn’t the same when he came back”.
“Australia didn’t recover full employment since the Great Depression until after World War 2,” Swan said.
When the global financial crisis hit the world in 2008, Swan said he decided he “wasn’t going to be another Scullin or Theodore”.
Attending an International Monetary Fund meeting in Washington in October, 2008, shortly after the giant banking and finance company Lehman Brothers had collapsed, Swan said he could “see the fear in the eyes” of the world’s leaders. He phoned in to a Rudd government Cabinet meeting the next day and spoke in support of a first stimulus package to put money directly into the pockets of taxpayers.
“The next day we started work on what would become the second stimulus package,” he said.
In January, he returned to New York to attend a private briefing from the US Federal Reserve.
He emerged with notes declaring that “overwhelming force” was required to prop up world economies. The world, according to expert advice to the Federal reserve, was staring at another Great Depression.
“It felt like we were going right back to the start: the fall-out from the First World War, the Great Depression and what it did to my grandfather and his family; the causes of World War 2,” said Swan.
And so the Rudd Government threw billions of dollars into Australia’s economy.
Swan remembers leading Coalition figures like Brendan Nelson, Tony Abbott, Malcolm Turnbull and Joe Hockey vociferously opposing his second stimulus package “even when it was genuinely clear that Armageddon was waiting for us”.
He also remembers the media assailing him over plunging Australia into deficit and debt – an attack he says has been all but absent against the Morrison government even now it has adopted the same policy.
“The Liberals opposed my approach all the way to a couple of weeks ago when Scott Morrison announced on March 30 that he and Josh Frydenberg, entirely justifiably, were undertaking the biggest stimulus package this country has ever seen,” Swan says.
“Of course they have my total support.”
Tony Wright is the associate editor and special writer for The Age and The Sydney Morning Herald.