14 December 2010

Is that the best you can do?

I have no idea about what would be best for this country in terms of banking reform, so I won't criticise Swan's proposals on that basis. I will note, however, that Swan's idea of reform basically involves tilting the rules against smaller players and in favour of big ones, extending guarantees of taxpayer underwriting to all participants indefinitely. Swan is hyping his reforms far above their actual significance in terms of making the Australian banking system better, or even significantly different.

Wayne Swan was the Treasurer who introduced the stimulus necessary for Australia to ride out the GFC in 2008. This was achieved with a number of gimcrack measures such as the $900 cash gift, the home insulation thing and the school building fund. This shows he has an eye for parish-pump politics but his approach to the big picture can't be anything but piecemeal.

Actually, no he doesn't have much of an eye for parish-pump politics: you're only as good as your last gig. In Anna Bligh's last election win in 2009, Swan intervened to pull off a last-minute victory for his party, which they have since squandered. Since then, Swan was a late and hesitant convert to getting rid of Kevin Rudd, and only snagged the Deputy's job because nobody else wanted it. Any concept of understanding for Queensland politics by anybody to the left of George Brandis is a dead letter after this year's Federal election: nine seats in the Deputy PM home state were won by the supposedly hapless LNP. Retirees and children alike lined up for a shot at Swanny and Kaiser and got away with it, and at Queensland's next election they'll do so again.

Swan cut his political teeth in the aftermath of Whitlam, where talk of sweeping reform made Labor flinch, and he criticised Paul Keating in his final, reform-exhausted years. Now Swan has grown weary of reform, but without any enduring achievements to show for it. Yes, he may end up balancing the Budget, but so what? Alan Stockdale strived for that end and look where it got him; beloved by his party in his own state and pretty much a non-entity in the eleven years since leaving office. Nick Greiner was more successful since leaving office but his aims of economic capability were similar and Labor slid back into government, scornful of anything longterm and running NSW into the ground. Liberals in SA have nothing to show for giving Labor time and space to rebuild its economic credibility.

Swan, like Treasurer John Howard before him, has done the country no favours by tilting the balance in favour of complacency and arrogance on the part of major banks.

Banks require competition to keep them honest, but not to the point where they take mad risks like the US and European banks did up to the GFC. Banks also require some level of security in regulatory and financial terms; there have to be consistently applied regulations and they can't just be raided each time the government or its cronies need some cash. The trick is to strike some sort of balance; a balance harder to strike since the GFC smashed a previously stable-looking consensus. There are no cues worth taking from Washington or London, two similar jurisdictions which set the rules of global capital to a much greater extent than Canberra does. How do we get banks to improve their ramshackle IT systems and shed bloated middle-management?

Joe Hockey shows some signs that he gets this, but when it comes to convocations of thinkers addressing the big issues nobody ought confuse the Federal Parliamentary Liberal Party with Plato's Academy. The degree to which Hockey's critique is valid is the key to his party's political fortunes over the next three years; economic competence is a matter of the next three years, not the past three. Hockey can't do the heavy lifting by himself. Tony Abbott, get across finance sector reform fast: you might have to sacrifice a press sec or two to get a finance sector adviser, but it will be worth it if you get into government by breaking the second-best politician to have come out of Nambour.

There should be a cheeky backbench member or committee putting out papers that differ with Swan's sense of direction, like Turnbull's first-term tax ideas that got up Costello's nose; that there isn't is a testament not to political cohesion but weakness on the part of this government. That Gillard can't get rid of Swan or even get a rocket up him shows how limited her government is.

(Who, exactly, would be Treasurer if Swan fell under a bus, or overreached himself politically? Chris Bowen? Too early, too up himself too soon if overpromoted, no evidence of any reforming instinct. Tony Burke: same as Bowen but less capable and numerate, raised in the Bob Carr school where the snappy one-liner trumps all. Craig Emerson, maybe? Simon Crean? You can see the problem here).

We have a government that is sharply limited except in comparison with its opponents, and a complacent banking system: and these are the foundations for our country/economy to adapt to far-reaching and rapid economic, technological and geopolitical change? Really?

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