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Sep 21, 2011

Why not skip Treasurer of the Year this time?

Cartoon: By Nicholson.

It must be the fiscal silly season, although with Keynesian economics, that is assumed to be a year round thing. There is conjecture that Wayne Swan will be Euromoney's 2011 finance minister of the year:

If Wayne Swan is chosen as Euromoney's 2011 finance minister of the year next week as tipped, it surely won't be because of the glowing endorsement of Australia's top bankers, even if they have performed at least as well as Canada's during the financial crisis.

Nor will it be because Swan has followed last year's winner, Russia's Alexei Kudrin, in quarantining a pre-crisis oil windfall into a budget stabilisation fund that proved "crucial" to Russia weathering the global storm better than most had expected. And neither is Euromoney likely to praise Swan for his "championing of the free market and fiscal prudence", as it suggested of the Russian liberal reformer.

Instead, the accolade would mostly amount to a "being there" award for the ALP operative who climbed up through the party's parliamentary ranks to become Treasurer and clung to his job as the global crisis claimed many of his G20 counterparts and as the local factional warlords claimed Kevin Rudd.
It is difficult to see what, if anything, there is to recommend Swan. He became Treasurer when Labor came to power, and inherited a basically buoyant economy. When the GFC hit, Australia was in a very good condition to handle it without much in the way of government intervention.

Instead of leaving well enough alone he panicked and began a massive stimulus program, which wasted billions. There were the $900 checks sent out with the governments advocacy to spend, spend; spend us into a better future. Those who followed the directions certainly stimulated the Asian manufacturers of electronic and other goods.

Then we had the copy of the US Cash for Clunkers scheme, which had a similar result, a lot of money wasted. Not to be put off by failure, he then backed an insulation scheme, with the primary purpose of getting money spent as fast as possible. The result of this was 200 homes burned down and four deaths. Countless millions have been spent since to undo the damage.

But wait, there’s more. The next grand plan was Building the Education Revolution, (BER). Under this scheme, school halls were to be fast tracked, even where they were not required, with the primary purpose of getting money spent as fast as possible. The result was buildings cost 3-4 times what they could be built for anywhere else. BER is still referred to as the “Builders Early Retirement scheme.”

The National Broadband Network is another grandiose scheme to spend at least $35 billion on a Rolls Royce high-speed broadband scheme, with fiber optic cable right into 95% of Australian homes. No cost benefit has ever been done on it as the government claims that it was an election promise, and is not necessary. One problem is, that by the time it is constructed, mobile devices will deliver better speeds and be more popular than fixed installations.

Since Labor came to power the country has been in the centre of an unprecedented mining boom, with record prices for our commodities, yet Swan has consistently failed to balance a budget. He has in fact run such massive deficits, that borrowings are running at $100 million per day since they gained office. They are introducing two massive taxes, and are holding yet another tax summit to raise others.

Seriously, if this guy is the best Euromoney can come up with; it would be better to simply not award the prize this year.

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