In the 40 years I've now been an economic journalist for Fairfax Media
I've given 12 federal treasurers the benefit of my free advice. I doubt
it has made much difference, but I do know this: despite all you read in
the paper, our economy is now far better managed than it used to be.
For
this I give most of the political credit to just three of them: Paul
Keating, by a country mile, Peter Costello and one you won't believe:
Wayne Swan.
That the economy is now far better managed is easily
proved. We went from boom to recession in my first year, 1974, back into
a severe recession in 1982 under treasurer John Howard, and then again
in 1990 with Keating's "recession we had to have".
Each was worse
than the one before and each was correctly labelled "the worst recession
since the Great Depression". I formed the view that recessions happened
about every eight years.
But as Paul Bloxham, of the HSBC bank, has
reminded us, Australia is now in its 23rd year of continuous economic
growth. Must be doing something right.
To have achieved such an
unprecedented gap since the last severe recession we had to escape the
Asian financial crisis of 1997-98, the US "tech-wreck" recession of the
early 2000s and the Great Recession that followed the global financial
crisis in 2008 - and still isn't really over.
Reckon that was all down to good luck?
We
owe it at least as much to good management. I know because I remember
the roller-coaster ride the economy was on before the econocrats got it
back under control.
Wages rising 25 per cent in a year and
inflation hitting more than 17 per cent under the Whitlam government;
inflation back up to 12 per cent under treasurer Howard and unemployment
peaking above 10 per cent after his recession; mortgage interest rates
hitting 17 per cent and unemployment peaking at 11 per cent in Keating's
recession.
Turns out the present growth period accounts for just
over half my 40 years. And of my 12 treasurers, Keating, Costello and
Swan were in office for well over half.
Keating is our best
treasurer by far because he instigated the sweeping reforms that
transformed the economy and laid the groundwork for better day-to-day
management of it. He made the economy less inflation-prone and more
flexible, thus able to reduce unemployment faster.
Costello's
greatest achievement was to free the Reserve Bank to change interest
rates as it saw necessary, meaning the economy is now managed more by
econocrats than politicians. He also ensured our banks were tightly
supervised while the Americans were letting theirs create so much havoc.
Swan
deserves a spot on the treasurers' honour board purely for his
surprisingly deft handling of stimulus spending and human confidence
after the GFC, ensuring we suffered only the mildest of recessions.
Aided by some in the media, his political opponents have had great
success in rewriting that recent history. But later historians won't be
deceived.
