Wayne Swan: Economic inequality and the global rise of right wing nationalism
Wayne Swan is the President of the Labor Party. He served as Australia’s Treasurer from 2007 to 2013 and was Deputy Prime Minister. Wayne is credited with helping save Australia from the GFC and in 2011 was crowned World Finance Minister of the year.
As the author of numerous books on social policy, he has lead the domestic and global debates on the dangers of economic inequality.
Wayne joined Misha Zelinsky for a chinwag about what went wrong at the 2019 federal election for Labor, why fiscal policy still matters in economic management, how far right nationalists are using inequality to win government around the world, why big philanthropy is a big problem for democracy, how Australia should manage an assertive Chinese Communist Party and where to from here for social democrats around the world.
Misha Zelinsky: Wayne Swan, welcome to Diplomates. Thank you for joining us.
Wayne Swan: Good to be here.
Misha Zelinsky: Now, what a place so we could start. It’s been a few months since the 2019 federal election. It was a difficult one for Labor Party people, the Labor Party supporters and members. I’m kind of curious, firstly, did you see it coming? And then, to your mind, what went wrong is the big question. But we can start there maybe.
Wayne Swan: Well, I didn’t think we were going to have an easy victory. And I think the way in which the opinions polls were hyped up and the expectations got out of control and the bookies got it all wrong simply heightened an inevitability about our victory that wasn’t there in the foundations. And indeed, I don’t think it was there in the published opinion polling either.
Wayne Swan: Yes, it was wrong, but it was not out in many respects and there’s no way in the world that anyone who was studying the opinion polling closely could’ve formed a conclusion that we were headed for a massive victory. Changes of government in Australia are always difficult, particularly for the Labor Party, and that applied last time. There are some things we did well, there are some things we did badly. We’re having a review about all of that, but I don’t think that there should be any automatic knee-jerk reaction when people are analyzing the result.
Misha Zelinsky: So there’s been a lot of talk, I mean, your state of Queensland, Labor did most poorly there until in terms of our primary vote, but there’s a lot of discussion about labor’s performance in regional areas, outer suburban areas and this sort of discourse that we’ve lost touch with traditional labor voters, more working class voters. Is that something that you think is true or something you’re concerned about?
Wayne Swan: Well, there’s no doubt that the Liberal Party campaign managed to dislodge many low-income, insecure and loosely politically aligned voters from the labor camp. No doubt about that at all. I think part of that was a very effective scare campaign, and particularly a campaign run under the radar via social media, which was promoting an economic Armageddon through death taxes and other claims that were terribly effective, got under our guard and dislodged those voters from our camp.
Wayne Swan: So we’ve got some fundamental reassessment to do there, because if you look around the Western world and you look at the progress of social democratic parties, there’s no question that what I call the radical right, and I include the Liberal Party of Australia, which has now been taken over, if you like, by hard right elements. There’s no smaller liberals in it. Around the world, those groupings have been successful in removing voters, particularly lower income working people, from support for social democratic parties through the use of wedge politics, through the use of race, through the use of gender and increasingly through the use of climate change to pull those voters away from their traditional social democratic support.
Misha Zelinsky: And so, you talked a little bit about this, yeah, the online campaign that we saw, but also there was the impact of the Clive Palmer money.
Wayne Swan: Sure.
Misha Zelinsky: How much did that influence the outcome [crosstalk 00:03:03]?
Wayne Swan: Well, there’s no question that the Clive Palmer money supercharged the themes that the Liberal Party were running. The Clive Palmer-
Misha Zelinsky: Which was $80 million spend, right?
Wayne Swan: Yeah. The Clive Palmer money was part of the conservative spend, so the biggest single spend that I can find in the Western world by a single person in an election campaign was turned into a preference recycling scheme aimed particularly at those groups that I spoke about before and it was very successful. So when people are evaluating this result, you can’t ignore the impact of this big money, which certainly had an impact in my home state.
Wayne Swan: But I don’t believe the results in Queensland, putting aside the central and North Queensland seats, were any different to what we saw anywhere else in the country. It’s true, we did lose the outer suburban vote and we lost a regional vote, but that was no different in Queensland than it was anywhere else bar in Queensland the three seats that you would describe as directly affected by the issue of coal, where there were separate circumstances. So I don’t think the result in Queensland was little different to the result that we saw in outer suburban Sydney, regional Victoria or regional New South Wales. Or, for what matter, in cities like Perth.
Misha Zelinsky: Now, unpacking this. You touched on the global phenomenon. I think that this is a challenge for all social democratic parties around the world since global populism. In many ways, I think this is almost the U.S. 2016 election result or the Brexit result arriving in Australia, it has similar characteristics. So I’m kind of curious, firstly, what’s driving this global populism? And then why is it that the right, and the far-right, seem to be able to dig into it a bit [crosstalk 00:04:41]
Wayne Swan: This is the critical question. The fact is that the Great Recession, or otherwise known here as the global financial crisis, really shattered the foundations of modern capitalism, which had already been loosening through 40 years in the growth of income and wealth inequality. And that growth of income and wealth inequality has bred resentment. And that resentment has materialized in the form of much more insecure work, the disappearance of what were once solid career opportunities with decent pay.
Wayne Swan: And that, in many ways, shattered the faith of those people in basically their democratic arrangements. And as that’s occurred, unless governments domestically put in place a range of policies to look after those people, indeed as we did, principally, in this country, those votes increasingly became lost to basically what I’d call the center-left, and they’ve been increasingly captured by what I would call the radical right.
Wayne Swan: You’ve seen this most particularly in recent elections in Scandinavia, you’ve seen it in Sweden, you’ve seen it in Finland, you’ve seen it around the world, that the use of race, the use of gender, to play into the insecurities of working people, and to play in to their loss of faith in the authority structures and decision making structures, in a society where they see the great gains of their labor principally going to a few at the top, has been the driver of the radical right and the great failure of the post-war period.
Wayne Swan: See, for 30 years following the war, policies were put in place to drive a more equal and fairer society. And they were done as a hedge against communism on the left and fascism on the right. Following the rise of Thatcher and Reagan, and the advent of trickle-down economics, otherwise known by many as neoliberalism, we’ve seen a growth in rampant income, wealth, and inequality. And that has seen a fracturing in societies where there was once a consensus about a fairer share being the best way to drive prosperity and growth into this notion of trickle-down economics that if you give more to the top, then somehow, everyone down the bottom will benefit.
Wayne Swan: Well, that’s just produced an enormous amount of distrust and it has created, if you like, the political space for the rise of the authoritarian radical right, which we now see so dominant in many countries across Europe, and you see represented in the leadership of Donald Trump.
Misha Zelinsky: Yeah. And you covered a lot there about, I suppose, the conditions that are allowing this radical right to rise around this insecurity, economic inequality. The thing that’s got everyone, at least that’s on the center-left of politics about how do we respond to this, is that the conditions would seem to be good for a social democratic agenda around inequality and [crosstalk 00:07:35]
Wayne Swan: They certainly are, but there hasn’t been the sort of social democratic leadership that we’ve required. I mean, we’ve done best here, in Australia and New Zealand, where we’ve had our social democratic aspirations reflected in Labor parties. And the anchor of our Labor Party is, of course, the trade union movement, which provides that direct linkage. And I think that has been why you could actually say that the big difference, say, between the radical right in Australia having a section of a Liberal government, and manifested, say, in the form of Pauline Hanson with a couple of senators, the big difference between that, and the election, say, of a Donald Trump in the United States, has been 30 years’ worth of real wage growth in Australia and 30 years of wage stagnation in the United States.
Wayne Swan: But we started to see that wage stagnation. We started to see the profit share rise and wage share be suppressed. We’ve seen policies increasingly in this country after the six years, where pre-tax income has been suppressed in the form of wage suppression, post-tax income has been suppressed in the form of more regressive taxation. The twin combination of unfair taxes and low wage growth is tailor-made for either an ascendant social democratic party to storm to victory, or for a radical populist to storm the victory if the social democratic offering is not up to scratch. And when you translate that into our last election result, we should’ve won, but we didn’t have the sort of defeats, either, that you’ve seen in various other social democratic offerings in the past.
Wayne Swan: That’s not an excuse for our outcome.
Misha Zelinsky: And so, in terms of connecting with working people and sort of reflecting their concerns, one of the challenges seems to be that there’s a perception, at least, that all sides of politics have been sort of colonized by so-called elites. And that seems to particularly hollow out that social democratic side of politics, both here and abroad. I mean, do you think there’s something about this question of big elites being from nowhere and people being from somewhere, and this question of place [crosstalk 00:09:58] communities?
Wayne Swan: Well, I think that is really important. And I think it’s a reminder to all of us, on the center-left of politics, that to be out there with the people all the time, or of the people all the time, as comfortable in the tea room as you are in the boardroom, is absolutely critical. And I think many of our comrade parties around the world, in particularly the U.S. Democrats, have fallen prey and have not really learned that lesson.
Wayne Swan: So I think it’s something we all have to keep in mind, but it is also something that the radical right specializes in through their authoritarian leadership and the associated gutter campaigns that they put into the system beneath the radar. And I would cite, in this example, the vilification and the smashing of the standing and reputation of Bill Shorten behind the scenes through one of the most aggressive and unprincipled demolition jobs on a politician’s character and standing that I’ve seen my whole time in politics.
Misha Zelinsky: Well, and so, in terms of… One of the things I think is challenging for social democrats is that, as faith in democracy, faith in government, goes down, it almost suits the right-wing agenda because they don’t like government [crosstalk 00:11:18]
Wayne Swan: Well, of course it does. You see, the whole right-wing agenda, and this is what you see at the core of this government here, is to destroy the credibility and standing of government and to demonize government intervention. So, stage one of that was to demonize our stimulus, which saved our country from recession. To continue to demonize it, to do that, and to get into bed with plutocrats and parts of the business community so that when next time a huge global event comes, no government will have the guts to stand up and do what the Rudd and Gillard governments did in a time of need, which was protect our people and to use the power of government to do so.
Wayne Swan: But it is ongoing, you’ve only got to pick up a newspaper or observe just about any policy of this current Liberal government, and find, at its core, an attempt to destroy the credibility and efficiency of public service provision. And there is perhaps no program that demonstrates that more than the so called robo-debt campaign that’s going on in Centrelink. The treating of people, that they fired the hired staff in Centrelink so that when the public wants to actually ring and find out what their entitlements, they’re on hold for 30 minutes an hour. This is all part of a systematic attempt to destroy the quality of public service provision so they can turn around ain the end and say to social democratic parties like mine, “Look, you can’t trust government, they can’t deliver services. I’ll tell you what, we’ve got a better offering. Have a tax cut instead.”
Misha Zelinsky: And so, you touched on plutocrats. And one of the things that I’m so curious about, and there’s been a big backlash against what they called the Davos tops. And so, I mean, how do we make the case that democracy in government is still the answer, given that you see, increasingly, these big philanthropists plutocrats, where the argument is we can return the benefits of this inequality actually-
Wayne Swan: Well, it’s outrageous and shocking. If people want to give money and make their society a better place, fantastic. But don’t expect a tax deduction. Don’t erode the basis of the government to provide the basic service provision upon which a civilized society depends. It’s just shocking that people who don’t actually pay the right amount of tax in the first place then turn around and want to give more money and get a tax deduction for that.
Wayne Swan: Look, I know many people in the Australian business community who pay their taxes and they give away a lot of money, but equally there are plenty of people with a lot of money who aren’t paying their fair share of taxes and still expect a tax deduction and be regarded and favored in the community because they’ve given away money when they have shattered the very linkage between collecting tax and service provision by becoming tax termites and ripping away at the very essence of a civilized society.
Misha Zelinsky: And it also is fundamentally undemocratic in that, ultimately, you want to see taxes collected by the government people deciding where those taxes should be [crosstalk 00:14:07] correlation.
Wayne Swan: Exactly. And no wonder people then lose faith in democracy, because they see people who obviously have a lot of money, they see the publication from the Tax Stats that they’re not paying it, and then they see them standing up pretending to be very generous because they’re at some very worthy cause using these people as a shield against the underlying evasion they’re engaged in, and they expect to be clapped. No wonder the average person gets cynical.
Wayne Swan: I mean, no wonder the average wager could get… well, actually, gets really cynical when all they ever hear is of high profile people, be they sporting people in Rugby Union or whatever, who are earning millions of dollars a year, but no one’s out there debating at the same time the fact that they can’t even get an enterprise bargaining up for a 2% increase. And they see this conflict. A news agenda dominated by elements of identity politics and big money for the top-end of town, and on the other they don’t hear many reports about the fact that their enterprise bargaining’s being squashed and they’re not going to get a decent wage increase for the next couple of years.
Misha Zelinsky: And so, yeah, in terms of this question of identity politics and economic justice, I mean, do you see those things in conflict? Because a lot of people say, “Well, we have to choose one or the other,” but my view is the thing that can unify people the most around whatever their identity is, is around economics and class.
Wayne Swan: Exactly, and just ask Martin Luther King. I mean, it’s just not well known that when he went on his freedom march it was called Jobs and Freedom, and it was called Jobs and Freedom for a reason. That gender equality, racial equality is always going to be ultimately completely unattainable without a degree of economic inequality. So, we don’t ignore them. They’re all part of the same equation. But when you’re a truck driver in Western Sydney, or when you’re a steel worker in Wollongong, and all you ever hear about is a sporting hero on a million dollars a year having a court case dominating the news every night, and then you’re told in your latest bargaining round that you’re not getting even a reasonable increase, well, you really get the shits.
Misha Zelinsky: Mm-hmm (affirmative). And so, I mean, it’s interesting, isn’t it? Whereas you talk to people in the business community or you talk to the Davos set and they say, “What are we going to do about populism?” You say, “Pay taxes and lift wages.” And they’re like, “Well, I guess we’ll never solve it then,” right?
Wayne Swan: Well, the two most fundamental elements of doing something about the entrenched long-term inequality in our community are progressive tax and a stronger voice for workers, principally through unions.
Misha Zelinsky: Mm-hmm (affirmative). And so you touched a little bit about the economy, GFC response or the Great Recession response. I’m kind of curious, firstly, you’re a former treasurer, what’s your take on the state of the economy at the moment? So, current… we’re in the weakest period of growth we’ve had pretty much for a decade.
Wayne Swan: Well, it’s weak and anemic growth induced by the federal government’s refusal to put in place decent spending on infrastructure. It’s pretty simple, really. And it’s galling to watch the current treasurer somehow go out and try and blame the Reserve Bank for the fact that their fiscal policy isn’t working and that he intends to put pride ahead of outcome. We didn’t put pride ahead of outcome when our economy was challenged.
Wayne Swan: I mean, imagine if these clowns were in charge and there was a pronounced international downturn, the likes of which we had back in 2008 and 2009. Well, I know what they’d do. They wouldn’t act, because they’re part of a weird brigade out there that wants the cleansing impact of a recession. Because they see that as eating away at the power of workers and a way of reducing wages, and they also see it as a political opportunity to run some of the authoritarian lines that may work for the sort of parties of the far-right elsewhere when people feel dreadfully insecure.
Misha Zelinsky: And so you talked about, basically, that the Reserve Bank, which is a controlled monetary policy-
Wayne Swan: Yeah.
Misha Zelinsky: … and the treasurer who’s ostensibly in charge of fiscal policy. Now, there’s a suggestion they’re going to be pulling against one another.
Wayne Swan: That’s right. Well, the treasurer’s fiscal policy is wrong and to cover that up he’s seeking to somehow say that the Reserve Bank governor should fix it through monetary policy.
Misha Zelinsky: Despite [crosstalk 00:18:18] big 1%.
Wayne Swan: Monetary policy is tapped out. Tapped out. Everybody’s saying, and it’s not just the governor of the RBA in Australia, I mean, there has been an excessive reliance on monetary policy because governments around the world have been dominated by an austerity ethos and therefore a reluctance to effectively deploy fiscal policy. Fiscal policy here and around the world should be playing a much, much larger role as we seek to deal with the economic challenges that we face 10 years on from the Great Recession.
Misha Zelinsky: And obviously when you were a treasurer in the then-run government, there was a massive intervention via stimulus package. Do you think it’s possible today with the world the way that it is for the-
Wayne Swan: No.
Misha Zelinsky: … global response that we saw from every country to be coordinated through the G20 or any other mechanism?
Wayne Swan: Well, 10 years ago, in fact, in March, early April, 2009, the world came together via the G20 and put in place a massive stimulus package to save the world from a Great Depression Mark II and to ensure it was only the Great Recession. Despite that package, it’s taken most developed economies over a decade to come out. Australia sailed through that period. Our economy now is almost 35% bigger than it was in 2007. The American economy is in the low 20s. The British economy is around 20 or a bit below. We sailed through. And because we didn’t see the loss of hundreds of thousands of jobs and the destruction of so many small businesses, we averted the skills and capital destruction that dragged other economies around the world down.
Wayne Swan: Yet still, the conservative parties in this country carry on as if this was a massive mistake. Now, because of, if you like, the rise of the radical right it’s hard to see us getting the sort of international cooperation that we got from the London Summit in 2009 that dragged the world out of their recession and didn’t become a depression. If we have to go into those circumstances again, I don’t think we are or will see the sort of actions that G20 took 10 years ago. And that will be a tragedy, if that happens.
Misha Zelinsky: And so a lot of this dysfunction we’re seeing principally probably arises from the election of Donald Trump in the United States which has been a disruptive force for the old world order, if you can call it that, and also the rise of China. Australia finds itself in the middle of this, particularly one of the big headwinds in our economy relates to this so-called trade war between China and the U.S. I mean, how do we navigate that in a political sense and in an economic sense?
Wayne Swan: Well, sensibly, because our principal trade relationship is with China and our principal investment relationship is with the rest of the developed world, and our principal security relationship is with the United States. So we have to be incredibly careful and deft in what we do. We can’t be compliant if the China is out of step when it comes to really important issues like the South China Sea or, for that matter, even Hong Kong. But equally, when we are seeing some of the absurd decisions announced by the U.S. President, we can’t be seen to necessarily be compliant there. There is a real challenge for diplomacy and nuance for us to navigate what is a very, very difficult period.
Wayne Swan: You see, this issue of inequality, however, is not just one that’s a problem in the U.S. and in the developed world. It’s a massive problem in China itself and, I think you’ll find, a massive problem behind the protests that you are also seeing in Hong Kong as well, because-
Misha Zelinsky: Yeah, there’s a real challenge around the rental market there and the average wages from Hong Kong.
Wayne Swan: Yes, that’s right. That’s right. Intergenerational issue. You know, it’s not just a question of political rights. But they have no political rights and are facing, if you like, economic prospects that they can have no say in or real impact on their government’s arrangements. So it’s a complex world. There’s no doubt the rise of China has been tremendously beneficial for the Chinese themselves but also for the rest of the world, but what it requires is principled and nuanced leadership, not bombast.
Misha Zelinsky: And you touched there on an intergenerational inequality. I’m kind of curious about that, because one of the big things of the last election, just returning back to the election, was this question of the, imputation credits became a big focus and the impact on retirees. What about the impact on young people who are unable to get a secure job or are unable to enter property market? How are we going to balance the intergenerational pact?
Wayne Swan: It’s a very good point. Well, we have got a huge intergenerational inequity problem. And my view is that our actions on negative gearing were broadly supported across the community for the very reasons that you have just outlined. I’ve got lost track of a number of people I know who have got negatively geared properties, but absolutely understand that there has to be fundamental change in this area if their kids and/or their grandkids are ever going to get a toehold in the market. So I don’t think that was one of those policies that was responsible for the blowback in the election. There might be ways in which you could be nuanced and change, but the fundamental generational inequity involved in those arrangements is one I believe that is understood in the community and the consequence was a tolerance for change in that area.
Misha Zelinsky: Well, the thing is as well, I mean, on the question of negative gearing, that’s a policy Labor took in 2016-
Wayne Swan: Exactly.
Misha Zelinsky: … when it very nearly won in the election by one seat majority, or left a Turnbull government a minority government at the time. So, in terms of what are the policies we need to do though to make sure that we can… because one of the things that worries me is young people increasingly feeling disenfranchised from the countries that they’re residing in in terms of youth unemployment in the regions. And I think some of this sort of far-right politics we’re seeing there was a trumpification of the regions, a lot of it is from young people not feeling they got a chance to get their hand on the first rung.
Wayne Swan: Well, we got to spend a lot of more time interacting and communicating in this area. I think a lot of young people want to know that principle matters, I think a lot of people want to know that values matter. Now, our challenge is to live up to that creed. And this is the point that I’m going to continue to make as president of the party, that principles and values matter. But so too does compromise from time to time, because to ultimately implement your principles and your values you’ve got to hold power. And we have to be seen to be able to do that in ethical ways.
Wayne Swan: And I believe there’s probably no party around the world in a better position to actually do that properly than the Australian Labor Party. The period of government under Hawke and Keating, the period of government under Rudd and Gillard, over and above any of the blemishes those governments had, did achieve an enormous amount. Very much in the tradition of earlier labor governments whether it’s a post-war reconstruction under Chifley. Labor’s got a tremendous history to draw from as we go forward and to demonstrate to people that politics and government can be a force for good and can make a difference in the lives of people.
Wayne Swan: But it’s just, making a difference through a government decision-making is not something that happens one day and is seen the next. To convince people that these objectives could only be achieved in the long-term, not the short-term is the challenge, because the populace from the radical right will never give a principled and effective policy a chance to get off the ground. No greater example of this than what the Conservatives did to the carbon price. If that carbon price had survived in Australia, we would be having an entirely different political and economical debate. And what sections of the business community aligned with the radical right of the Liberal Party did in destruction of the carbon price will go down in history as one of the most wanton acts of economic and social destruction in the history of our nation.
Misha Zelinsky: Mm-hmm (affirmative). I actually also would give a special shout-out to the Greens who were voting against the ETS twice in 2009.
Wayne Swan: Exactly. Exactly. [crosstalk 00:26:36] that as well. Yeah.
Misha Zelinsky: I always like to remind my friends of that if they are particularly left-wing and inner-city Greens that there’s only one party that’s put legislation as a party of government to the floor and enacted price and action on climate change.
Wayne Swan: Well, if we would’ve got it through back in 2009, a lot of the other events that occurred may not have occurred either, but anyway.
Misha Zelinsky: And so, how does Labor… I mean, the last 10 years, I think, the climate wars for the last decade in Australia have been pretty devastating, both the cause of climate action, but also on progressive politics. I mean, how do we square this circle between these young people who are very energized about climate change and people in the inner city that I think are energized?
Wayne Swan: Well, we’ve got to get them to understand that when you’re tackling climate change and doing very substantial emissions reductions it’s just not a question of coal. It’s a question of emissions reductions across the board. Of course we have to move as quickly as we can from fossil fuels and replace that with renewable energy. And it has to be driven. It has to be driven by a price on carbon. And the problem at the moment it’s not driven by a price on carbon. Many of these well-intentioned people think that their obligations are discharged by fighting against a particular coalmine here or there. The truth is that our coal, our thermal coal is 4% of world’s thermal coal. Most thermal coal around the world is mined-
Misha Zelinsky: Locally and used locally. Yeah.
Wayne Swan: … and used locally. What the world needs, what Australia needs is a carbon price for us to make the transition across all of those elements. To think that if you knock off Adani or knock off a couple of coalmines in the Adani basin, that this is some substantive contribution to the fight against climate change in the short term or the long term is simply not true. Yes, we have to make that change. We are, despite the government’s opposition, making substantial headway in renewable energy thanks largely to the NASA progressive business and the Clean Energy Finance Corporation that I set up and that the Conservatives did not manage to destroy.
Wayne Swan: So this climate change debate is broader and more complex than it appears in the media, and as a progressive party we’ve got to continue to argue for a strong set of emissions reductions which are far greater in their impact and their scope than any one particular coalmine at any one point of time. I was with Nicholas Stern the day that he announced the Stern report back in two-
Misha Zelinsky: Was it 2009? ‘8?
Wayne Swan: No, not ‘9.
Misha Zelinsky: ‘7?
Wayne Swan: Yeah. ‘6, probably.
Misha Zelinsky: ‘6? God, that was a long time ago. I remember [crosstalk 00:29:15]
Wayne Swan: When I was in Whitehall visiting Gordon Brown.
Misha Zelinsky: Yeah.
Wayne Swan: And if you go to the Stern report, it always envisioned that coal production would go down gradually as renewable energy went up. And that has not fundamentally changed. We are not getting the emissions reductions across many of the other critical sectors that we need, and so much of this concentration on a particular mine here or there drags critical attention away from what is a diabolically difficult area of public policy achieving these reductions across a whole range of sectors that people never talk about.
Misha Zelinsky: And the other thing I think we need to… those that are passionate about climate change and the environment, except we need to make significant action in that space. I think one of the things that challenges the politics of it is the asymmetry of who’s impacted.
Wayne Swan: Yeah.
Misha Zelinsky: And so the people that are very passionate about it in the city, their job’s not impacted. But the people that are going to be impacted, have to wear the costs of it have to-
Wayne Swan: Exactly. Yeah. And where the people are impacted, they feel that the people that have strong views don’t care about them.
Misha Zelinsky: Yeah.
Wayne Swan: So you get a political backlash that ultimately undermines the progress on climate change.
Misha Zelinsky: Correct.
Wayne Swan: Because a very significant section of the progressive alliance is told by another section of it that they don’t count anymore, or that they don’t like their lifestyles, or they don’t know how to think, or they’re ignorant.
Misha Zelinsky: Yeah.
Wayne Swan: And that was the problem of the Bob Brown caravan.
Misha Zelinsky: Indeed.
Wayne Swan: And yeah, we just can’t go down that road if we are going to win this fight against climate change.
Misha Zelinsky: Yeah, and we need to build those coalitions and find ways… I think there’s a role for industry policy in terms of finding ways… industry’s going to decline over the time.
Wayne Swan: Absolutely. You know what I find when I go out? In the business community it’s a generational thing. If you meet anyone now involved in business under 50, they’re talking the economics of climate change. Because what’s going to drive climate change is not necessarily reductions targets. It’s going to be the fact that the market won’t lend to these people. That there’s good business to be done. So you could have a decent conversation with many in the business community who are younger, because they actually get the economics of climate change as well as the environmental issue and outcome. And they are actively out there, involved in the fight in a commercial way, and we need all of them in the tent.
Misha Zelinsky: And so I just want to turn a little bit back to your time as a treasurer and deputy prime minister in the Gillard government, commissioned an Asian Century White Paper. I’m kind of curious to contrast the view of the government then with how the world’s turned out. I mean, it was a very cheery or upside sort of document about the economic potential and perhaps overlooked maybe some of the bigger challenges of an assertive China that we’ve seen in the [crosstalk 00:31:54]
Wayne Swan: Well, it wasn’t meant to deal with security matters. I mean, it was a very good paper. And these people would’ve been burning books back in the 1500s. I mean, they eliminated the Asian Century White Paper from every government website.
Misha Zelinsky: Is that right?
Wayne Swan: Yeah, absolutely. Absolutely.
Misha Zelinsky: So it’s just gone? I didn’t know that.
Wayne Swan: I mean, I recommend it to anyone who’s interested in the future of our country should go and read the Asian Century White Paper, because-
Misha Zelinsky: How will they find it?
Wayne Swan: Well, it’s-
Misha Zelinsky: It’s on Wayne’s website.
Wayne Swan: Well, fortunately, it’s still around, but-
Misha Zelinsky: Right. Well, that’s an interesting aside. But anyway, we were getting into the… yeah.
Wayne Swan: Anyway. And it was so well received in the region. And in many ways, as I moved around and the members of the committee moved around, it was, if you like, putting the final nail in the coffin of White Australia, that they finally thought, over a whole range of issues, this seemed to bring together the notion that Australia saw itself as Asian-facing and part of Asia. And we have a different discussion now about Asia and Australia than we had when I first went to university or indeed was in politics for the first decade or so. You know, that we all understand that it’s part of a growing region and with it come the challenges, one of the biggest one we were talking of, climate change.
Wayne Swan: And the other one is growing inequality, because unfortunately the trickle-down model that has been used in the developed world is now being aggressively used in the developing world including by communist China and resulting in rampant wealth and income inequality in both types of countries. So the problems we face are similar. Of course, in our region at least a third of the countries are in dire poverty in what you’d call the broader Asian region and a lot more work needs to be done in dealing with their challenges. It’s not just a question of China when you’re dealing with Asia. Non-China Asia is bigger than China.
Misha Zelinsky: Sorry, India and Asia and somewhere else?
Wayne Swan: Well, but all those other little countries that there is so many of them where the very basis of development has not even begun. So there’s still a lot of poverty alleviation to be done in Asia. We do focus on the Asian middle class because it’s what brings so much prosperity to our country, but we shouldn’t lose focus either in Asia or in Australia on those struggling countries across the Asia-Pacific.
Misha Zelinsky: So when you said the White Paper was an economic document, obviously, there were defense white papers at the time, and there’s that duality that exists in public policy in Australia which is that kind of that Tony Abbott describes as fear and greed. Do you think the relationship with China since the Rudd -Gillard government has changed and how would a Labor government best interact with a more assertive China now?
Wayne Swan: Well, I think the Abbott government bungled it from day one when they held that completely dysfunctional G20 in Brisbane and Prime Minister started lecturing global leaders about the Australian health system and all sorts of bizarre things and he banned climate change from discussion at the summit.
Misha Zelinsky: That’s right.
Wayne Swan: So President Obama went and gave a speech up the road at the university about the importance of climate change. It hasn’t been a great start in terms of our relationships with China. I think the government’s playing catch-up there now, but still is deeply confused about where we are and who we are.
Misha Zelinsky: And so one of the things you responsibility when you’re treasurer is the FIRB decisions and the FIRB board reports treasurer in the cabinet. But I’m curious about foreign investment decisions. Should we worry about state-owned enterprises buying up shares [crosstalk 00:35:21]
Wayne Swan: Absolutely. And I-
Misha Zelinsky: … by an autocracy.
Wayne Swan: Well, of course we should. And one of the first statements I made after I became treasurer in the middle of 2008 was putting obligations on approvals for state-owned enterprises. We don’t want any government body dominating a supply chain or dominating a market. I didn’t-
Misha Zelinsky: And you talked about Chinalco trying to buy Rio Tinto?
Wayne Swan: Well, far bigger than that, but takeover… it was actually always an attempt to take over a BHP. So if we had five medium-sized companies in a particular area and they wanted to buy one, well that’s fine, but if they wanted to come in and buy the lot, no. So we put down some principles about competition being observed, the whole series of principles, because ultimately you don’t want another government directing the private enterprise activities of its subsidiaries in your country.
Misha Zelinsky: Mm-hmm (affirmative). And what about things like critical infrastructure? We’ve had [crosstalk 00:36:15]
Wayne Swan: Absolutely. Absolutely.
Misha Zelinsky: … network, but, of course, [crosstalk 00:36:19]
Wayne Swan: Well, in fact, I did that.
Misha Zelinsky: That was from the NBN, yeah.
Wayne Swan: Yeah. For a good reason. So yes, there are national security implications of these things, always has been, always will be. You shouldn’t be letting foreign countries buy companies in your missile launch zone, for example. And I stopped one Chinese company from doing that. I say there’s another example of that that’s almost live at the moment, of course.
Misha Zelinsky: Correct.
Wayne Swan: There’s always been a national security element of any form of economic policy. And I think in recent years the capacity, including under us the broader part in this outlook, if you like, has increased.
Misha Zelinsky: And so what about situation where government makes a decision and then China often responds with a fair bit of hostility about those decisions. You’ve got sort of this use what they call hostage diplomacy with the detaining of Canadian citizens, Australian citizens in response to 5G decision here and also with the arrest of the Huawei executive in Canada. I mean, how did you stand up to Chinese decisions at the time and how does a government do that going forward?#
Wayne Swan: Well, I had a couple of particularly difficult and tense meetings. In fact, went I went to China to explain the fact that for the first time Australia was going to enforce responsibilities on state-owned enterprise investments in Australia, I was accused openly of being a racist. Now, that regime exists to this day. It was put in place for a good purpose. But when you look at these people, you got to go and look them in the eye and tell them what you’re doing. I think one of the problems that we’ve got is a lot of this diplomacy doesn’t necessarily come from what’d have been across-the-table discussions.
Misha Zelinsky: You’re talking about megaphone diplomacy?
Wayne Swan: Yeah, megaphone diplomacy rarely works. But if you got to engage in it, you’re want to make sure you go and look in their eyes first.
Misha Zelinsky: Mm-hmm (affirmative). So you think there’s a bigger interpersonal thing that we should be working on in that sense?
Wayne Swan: Well, I think you got to work on it, but you got to be realistic it won’t always work.
Misha Zelinsky: Although [crosstalk 00:38:23]
Wayne Swan: You don’t know until you try.
Misha Zelinsky: Indeed. But, I mean, for example with Turnbull, when he was making some decisions around foreign interference around donations et cetera, Australia was essentially put in what they call the freeze where meetings were all canceled. So how do you handle that sort of stuff?
Wayne Swan: Well, I don’t know whether that was what caused that… I mean, but we’ve got, and any country would have responsibilities. For example, China wouldn’t let us invest in a company in their missile launch zone, so we most certainly wouldn’t let them do it in ours. And that was the conversation I had with the minister at the time, and it turned out to be amicable. So you got to have these discussions. They are difficult. There will be positioning publicly. There will be conflicts. But the most important thing, and you don’t always know what’s going on, is that there needs to be under the surface, effective dialog by other ministers, diplomats or both.
Misha Zelinsky: That’s right. That principal reciprocity, I think, is a good one and I think it’s a very useful one for us to use. So do you see a new… you know, we haven’t had blocks in the world since the fall of Berlin Wall. Do you see increasingly blocks emerging between the so-called liberal democracies and autocrats?
Wayne Swan: Well, what I see emerging is a hard-right movement which has its roots in both United States, in a number of European countries and most particularly Hungary, backed in by some pretty sophisticated operations coming out of the Soviet Union. And there is plenty of documentation now about how that worked in the last presidential campaign in the United States, how it worked in the Brexit campaign and how it has played out in a number of other countries. So yes, I think we have to be alive and alert to the fact that there is an authoritarian push across a number of democracies to influence domestic outcomes.
Misha Zelinsky: And so how do we deal with this challenge of these open systems? You know, this use of Facebook, social media, and yeah, you touched on it at the beginning with [crosstalk 00:40:25] question about it.
Wayne Swan: Well, by making sure that your capacity to repel it is high, to detect it and then repel it.
Misha Zelinsky: And should we be holding these… Facebook’s in America [crosstalk 00:40:37]
Wayne Swan: There’s no question that Facebook and those organizations are going to be subject to much more regulation and scrutiny than they have in the past and that will be a good thing.
Misha Zelinsky: And so just turning back to Australian politics, you recently retired from parliament, though you’re not retired, I know that, otherwise you’d jump across the table on me, I’m sure, if I were to say that, but are you missing politics at all, the [crosstalk 00:40:57]
Wayne Swan: Well, I got out of parliament, but I haven’t got out of politics.
Misha Zelinsky: Yeah, still the president of the party, so…
Wayne Swan: Yeah. No, but I got out because I wanted to have a bit more time to particularly spend with family. I’ve got two grandchildren, two children living overseas, so a bit of travel. I’ll never give up my public policy interests and I’ll never give up fighting for the Australian national interest, but I thought it was time to move on in terms of the parliamentary party, but I’m not giving up the discussion or the battle of ideas, because that’s something I’ve dedicated my life to. I just want a bit more time to get into surf which I’m doing a lot more of and to be with and talk to my family.
Misha Zelinsky: And so one of the things you talked about in your valedictory, but also in other, in the last few of years of being in parliament, was the impact of time away-
Wayne Swan: Yeah.
Misha Zelinsky: … and what politics does to families and the people. I mean, give us a bit of insight about the difficulties.
Wayne Swan: Well, it’s a cruel world and if you’ve got a busy job, you’re away a lot, so you miss so many important events and you run the risk of being emotionally separated from and decoupled from the most important people in your life. And I said it in my main speech, that I wished I’d actually made more time for that, and I do regard that as a failure in my career. I have just been fortunate to have a very tolerant family, but it’s something that I want to spend more time on.
Misha Zelinsky: In your time in politics, it’s probably fair to say that the prestige of the political class and of their institutions has probably diminished and faith in the institutions is much lower now when you look at any survey, not just in Australia, around the world. What’s driving that and can we get it back, and how? Because I think it’s so important.
Wayne Swan: Well, I think the radical right is driving it. I think there are political forces driving this who’ve got an interest in demonizing the role that government has in our society and that is a vested interest so they can grab more of the product of the labor of our people than they’re entitled to. I think it’s very much driven. It’s also driven in an underlined way by many of the technological changes, the speed of communication and the nature of communication, or sort of hyper drive that or make it a hyper circle, if you like.
Misha Zelinsky: And politics is sort of slow, the legislative process is slow, the world is quick.
Wayne Swan: Yeah. Yeah. So it’s a combination of all of those things, but we got to get back to a bit more moral base and value base in our politics we got at the moment. And to do that you’ve got to out these people and hidden actors behind the scenes who are setting out to destroy trust between people.
Misha Zelinsky: And you talked again, in your valedictory, about a turning point in Australian politics being the Tampa crosses, and you sort of touched there on values and morality. How did that impact on politics and what are the [crosstalk 00:43:38]
Wayne Swan: Well, it was the beginning of the radical right in Australia purposely, deliberately using race as a wedge. And we hadn’t seen that in that way in this country before. It’s been a feature of politics in the United States for a long period of time, but the first we really saw of it as the country basically came out of its White Australia and embraced multiculturalism was Pauline Hanson.
Wayne Swan: And what we’ve now seen as the embrace of Pauline Hanson by the conservative side of politics and the use of race and gender issues both openly and covertly, and I mean covertly even in the recent election campaign, where most people would say to you, “Oh, the refugees or all these things weren’t an issue.” They were. They were out there and they were pushed hard by that radical right under the scenes in many marginal electorates around the country. So we’ve got to try to eradicate that again. But my fear is that Liberal Party has been taken over by the extreme right and we’re in for an extended battle here. A battle for the nature and the type of Australia that we all want.
Misha Zelinsky: And it’s interesting, because you talked, in ’87 Howard was basically pilloried for his attitude to Asian immigration.
Wayne Swan: Yeah.
Misha Zelinsky: Then when Hanson first came to parliament she was basically excluded by the entire political class, but also by the media.
Wayne Swan: Now you’ve got Channel 7 paying her and TV channels paying her to do interviews, when she’s an elected member of parliament. It is an outrage and a disgrace that media organizations in Australia are involved in that sort of activity.
Misha Zelinsky: And then the other… you know, the somewhat perverse one is that Tony Abbott, of course, was famously involved in destroying One Nation Pauline Hanson and then the next iteration, when Hanson returned back into parliament in the 2016 double dissolution election-
Wayne Swan: Yeah. Well, the big-
Misha Zelinsky: … he was photos with her and saying that One Nation’s now different.
Wayne Swan: Well, the big change in my time in politics has been the elimination of smaller liberals for a Liberal Party and its takeover by a U.S. style republican right. And significant sections of the business community as well. The Americanization, if you like, of the conservative side of politics has occurred in our lifetimes and we’re now living with the consequences of it. And, as I said before, exhibit A is energy policy.
Misha Zelinsky: And so I was curious, and I’ve put this question to you before to give you a bit of a chance, but, your best day on the job and your worst day on the job in politics, I’m kind of curious about, what are the things that make politics so powerful and what can make it so hard?
Wayne Swan: Oh, well, the best day was the day we found out that we weren’t going to recession. That all the stimulus that we put out there had effectively worked. It was the very, very, very best day that I’ve ever had in public life. Because we didn’t know. We were operating in a very difficult policy environment. The worst day? Oh, there’s lots of bad days in politics.
Misha Zelinsky: I’ll bet.
Misha Zelinsky: And, well, I won’t explore that any further, but now, the final question I always ask everyone, so it’s a foreign policy podcast largely, we’ve covered all the terrain, but, three foreigners alive or dead would be at a barbecue at Swannie’s. Who would they be and why?
Wayne Swan: I think I’d go for Neil Young, just for a bit of sort of music interludes. I could’ve easily picked Springsteen.
Misha Zelinsky: Well, I was going to say, I mean, I think you could’ve picked a few.
Wayne Swan: Or even Dylan. So I would just take those three.
Misha Zelinsky: Okay. Practical list, practical list.
Wayne Swan: I would just [crosstalk 00:47:20] in terms of-
Misha Zelinsky: I think everyone… you’ll pay in about odds on to pick Springsteen, but we’ll go with Neil Young.
Wayne Swan: I’m just in the Neil Young phase at the moment for some reason.
Misha Zelinsky: Very good.
Wayne Swan: Secondly, it’s a sort of toss-up, but I’d actually say Lyndon Johnson.
Misha Zelinsky: Yeah, LBJ.
Wayne Swan: Well, you know, he really stuffed up the Vietnam War, but I tell you what, what he did with the Great Society, just about every big social and economic change of a progressive nature, most of which have now been eliminated now was put in by that guy. Anyone who reads the Robert Caro books will understand why I’ve chosen LBJ.
Misha Zelinsky: He’s a fascinating character as well because he’s considered to be the ultimate machine politician who did so much progressive change, right?
Wayne Swan: Well, that’s it. Well, maybe there’s a connection. Maybe he knew how to get it done.
Misha Zelinsky: Mm-hmm (affirmative).
Wayne Swan: And thirdly, well, I better choose an Aussie.
Misha Zelinsky: No, no. It’s got to be foreign.
Wayne Swan: Oh, foreign? Oh, right.
Misha Zelinsky: Yeah, yeah.
Wayne Swan: Well, you probably got to go for Mandela, right?
Misha Zelinsky: Oh, well, Nelson Mandela. Yeah, indeed. I mean, Nelson Mandela, LBJ and Neil Young all in a room at Swannie’s would be a good one, right? Well, look, before we go, I’m going to give a plug to the podcast. If you haven’t rated and reviewed it yet, please get on. It’s been a great chat with Wayne. If you don’t do it for me, do it for Swannie because he’s going to want to see this getting out to as many people as possible. So Wayne, thank you so much for joining us and I really appreciate the chat.
Wayne Swan: Pleasure.