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Transcript of interview with Kieran Gilbert: Sky News AM Agenda: 14 September 2018: Global Financial Crisis; Collapse of Lehman Brothers; Fiscal Stimulus

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SUBJECTS: Global Financial Crisis, Collapse of Lehman Brothers, Fiscal Stimulus.

KIERAN GILBERT: Welcome back to the program. With me now, the former

Treasurer Wayne Swan. Ten years on from the collapse of Lehman Brothers. It’s

hard to think that it’s been as long as that, but what’s your reflection on the days of

those dramatic events at the end of 2008 and the start of 2009?

WAYNE SWAN, MEMBER FOR LILLEY: Well, the day that Lehman Brothers

collapsed was the day that the crisis morphed into a threat, not just to the

Australian economy but to the global economy. It was simply terrifying. And for the

next nine months, the global economy and global demand fell off a cliff and

countries, particularly developed countries, right around the world went backwards

and went into deep recession. Australia was alone amongst the developed world;

only one other country that didn’t experience a deep recession during the Great


GILBERT: As you heard from the Finance Minister, and many, many times before

over subsequent years, that they say that simply you spent too much in the two

stimulus phases and that the recession could have been avoided without all of that,

and the other thing that underpins their argument is that they say it wasn’t just the

Costello management of the budget which got us there in the first place but also

the strength of China.

SWAN: Well that’s just dishonest and it’s delusional. It’s not a view that is shared

by the current head of the Prime Minister’s department. It’s not a view that is

shared by Treasury. It’s not a view that is shared by the International Monetary

Fund. And it’s generally not a view that’s shared by the business community in

Australia as well. He’s conflated a whole series of events. The truth is that at the

end of 2008 and 2009 the global economy was looking down the barrel of the

Great Depression Mark II. Here in Australia, we put in place the best targeted and

most effective stimulus package outside of China, which was a tremendous boost

to our economy, and it meant that our unemployment didn’t go through the roof,

like it did in the United States and like it did around the rest of the world. And the

consequence of that has been a far healthier, much more robust Australian

economy over the last decade. And the key reason for that is we avoided the

capital destruction and the skill destruction that occurred right across the rest of the

developed world. And it’s simply delusional and dangerous for a senior Minister, in

a Finance portfolio to make those grossly inaccurate statements. Because what it

says to me is that is there is another event, another global event, we have a

government in Canberra that would sit on their hands, not respond and expose the

Australian people to the power of recession.

GILBERT: And one of the things, I guess, history repeating itself at the moment

with the strong economy, the government’s just dumped a leader. As you reflect on

the events of those days, was that one of the critical flaws in dumping Rudd?

Because you were also basically saying that the government had lost its way, you

basically dumped the legacy of the GFC as well, and navigating it, which was the

then-government’s biggest achievement, Mr Swan?

SWAN: Well we didn’t. In fact, we continued with the same economic approach

under Prime Minister Gillard that we did under Prime Minister Rudd. And the

consequence of that has been a very strong Australian economy for the last

decade. I’m proud of our record, Mr Rudd is proud of our record, our whole

government is proud of the record during that period in office.

GILBERT: Could you have spent less though? That’s the fundamental question

when conservatives and others attack your time as Treasurer.

SWAN: Look, we spent the right amount of money. It wasn’t only just stimulating

our economy through the end of 2008 and 2009. What the government forgets is

that, through 2010 and 2011, the world was still being hit with the aftershocks of

the Global Financial Crisis. And of course they were still impacting on our

economy. One of the reasons why our economy is now 30 per cent larger than it

was at the end of 2007 is our stewardship not just through 2008 and 2009, but

through that period 2010 to 2013, when there were shocks coming from the GFC

continuously hitting our economy. Yes, through the latter part of that period, we

had a mining boom. But the world economy was not a healthy place during our

period in office. This government has got the advantage of the global economy

being much stronger. But for our period in office, we were battling the headwinds of

a very unhealthy global economy, particularly in developed economies like the

United States.

GILBERT: Well it’s certainly an achievement of both sides of politics — 27 years of

uninterrupted growth in this country; extraordinary, given some of the political

turbulence we’ve had. But Mr Swan, I appreciate your time. Thank you; talk to you


SWAN: Thank you.



Authorised by Noah Carroll, ALP, Canberra.