Little to show but he won't go
Source: The Australian
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- The Australian
- February 14, 2013
- 79 comments
Source: The Australian
It would spell the end for both of them, so for better or for worse, and it is always possible to get worse, they are bound together. Next to Gillard, Swan is the government's weakest spot; however, his removal would expose the Prime Minister's flank at a most dangerous time.
Previously, sound relationships between a respected prime minister and competent treasurer formed the bedrock on which the success of the government was built: think Bob Hawke and Paul Keating, or John Howard and Peter Costello.
When that relationship works it is a beautiful thing. When it stops working it's disastrous.
What is unusual in this government is that the relationship between the Prime Minister and Treasurer is stronger than ever and instead of making the government stronger, it is helping to kill it. The combination is lethal.
As one caucus member put it: "If this government has a problem around communicating, and it does, and if this government has a problem around the selling of an economic message, and it does, then both Gillard and Swan have to accept responsibility for that. They are the two central salespeople of the government."
Swan's weakness especially exposes a potential direct line of attack for the Ruddites. Reinstating Kevin Rudd would not only remove the problem of Gillard, it would remove Swan. Rudd could make Greg Combet treasurer. Or Bill Shorten or Chris Bowen. Anybody but Swan.
Despite receiving the world's best treasurer gong, Swan has been unable to win popularity or respect at home. His lacklustre performance has long been a subject of discussion in the business community and inside Labor.
Stories abound about his extreme sensitivity to real or perceived slights. A couple of years ago one business leader delivered an innocuous speech setting out areas for reform including tax, skills, infrastructure and regulation.
This newspaper led with the story, saying the speech reflected concerns in the business community about the pace of reform. That morning, a senior member of Swan's staff rang the businessman's offsider to inform him: "I had to peel the Treasurer off the roof after he read The Australian."
Often the Treasurer makes his precious-petal phone calls himself and, combined with his deeply personal attacks on individuals, they have muffled public criticism.
Public reticence gives way to private venting. They rip into him for deficiencies in style and substance. Like the cricketer who can't bat and can't bowl, he seems unable to build fiscal capital or market credibility.
Swan is ultimately responsible for two serious policy failures, either one of which should have secured his demise, yet he will probably survive both.
Whether or not the budget should be in surplus is debatable. Nevertheless, Swan promised until he was black and blue that it would be, so essential was it to the good health of families and the economy.
He even claimed it had already happened, writing an outright porky to his constituents that he had delivered a surplus when he knew he hadn't and probably never would.
Similarly the mining tax. He has known for months it would fall short of projections. The two measures described as flaws or loopholes that limit revenue - the depreciation provisions and reimbursement of increased state royalties - are no such thing. They are deliberate design elements agreed to in great haste to resolve a political problem.
In its short life, the mining tax has had five separate formulations, six if you count the original version in the Henry tax review. The forecasts have changed with each iteration, and before, during and after some iterations, culminating in the last mid-year fiscal and economic outlook, which predicted it would raise $2 billion - $10bn less than the first estimate for the super profits tax. So far it has delivered more than $126 million.
Swan expected people to believe a volatile tax could fund recurrent spending of $15bn, that he could rustle up another $15bn to pay for Gonski and the National Disability Insurance Scheme and provide a surplus.
He got away with it for a while. No longer.
There was a one-word response from the industry for what would happen if Swan tried to renegotiate the agreement: war.
The miners are not intimidated by the government and attempts to change even a single comma will be met with extreme force.
The problem for this government is that it pays far too much attention to the politics and not enough to the economics. It seems to think normal rules don't apply and it can reverse the adage that good economics is good politics.
The upshot is that unless the opposition makes a serious stuff-up in its costings, it will be difficult for Swan to run attacks on the assumptions underlying its calculations and its estimates of likely tax revenues, given he, with the full resources of Treasury and Finance, can't get his own numbers right.
The mining tax has caused so much grief, especially for Rudd, who never understood why he got dumped and Swan was promoted, and who delighted in drawing attention in his Sky interview to the fact the problem was created by Gillard and Swan, and it was up to them to fix it.
All very pointed and said with a strategically placed photo of himself with Pope Benedict in the background. You gotta love that kind of attention to detail.
Rudd's comments were not, according to Ruddites, part of a premeditated plan to ramp up leadership speculation. Rudd has only to sneeze to do that. It was simply an opportunity for payback too good to pass up. The Ruddites remain uncertain if anything will happen - maybe it will, maybe it won't - , depending on what the next few batches of polls show.
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COMMENTS ON THIS STORY
- best negotiator of perth Posted at 1:10 AM February 14, 2013Comment 1 of 79
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