HON. WAYNE SWAN MP
FEDERAL MEMBER FOR LILLEY
FORMER DEPUTY PRIME MINISTER & TREASURER
A Tribute to Jenny Macklin’s Public Policy Contribution on the 10th Anniversary of Labor’s 2007 Election Victory
Inclusive Prosperity and Trickledown Economics: A Distinction based on Distribution
FRIDAY 24 NOVEMBER 2017
Tonight, I’d like to reflect on the ten-year anniversary of the election of the 2007 Labor Government and pay tribute to one of the most dynamic, tenacious, and successful champions of its Ministry, Jenny Macklin.
It was about this time ten years ago that I was sitting in the Channel 9 studios in the National Tally Room.
As I watched the results come in – a 3 per cent swing to Labor in Lilley, a 4.5 per cent swing to Labor in Jagajaga, and perhaps the most satisfying, a 5.5 per cent swing to Labor in Bennelong – it was obvious that something very special was happening.
As the votes were tallied, those of us on commentary panels, or at party headquarters, or in electorate offices around the country absorbed the enormity of what had unfolded.
Labor had won government after 11 years of conservative rule, it had enjoyed the biggest Federal election swing in over 30 years, and it had unseated a Prime Minister for only the second time in Australia’s history.
Not since Gough Whitlam had swept to power in 1972, when I was 18 years old, could I remember a similar popular groundswell.
From the suburbs to the cities, the atmosphere in Australia in November 2007 was thick with a hunger for change.
For a Labor Government.
I am immensely proud of the record of the Labor Governments of 2007 and 2010 – the policies we drove, and the people who drove them.
Foremost among these is Jenny Macklin, about whom I’ll speak more soon.
The history of these Labor Governments is still being written and the details of their legacy will be contested for many years to come.
But in casting our minds back to the events and the Government of a decade ago, I think it’s important to assess where Labor finds itself right now, at the end of 2017 – how we define ourselves, what we fight for and, more importantly than ever in the context of this Government, what we fight against.
In recent years, during my time on the Opposition backbench, I’ve spoken more frequently and urgently on the topic of Inclusive Prosperity – as has Jenny, but more than anyone else in the political system Jenny has continued her crusade against poverty and its drivers.
I believe the Left has a once-in-a-generation opportunity to lead a community conversation to broaden and deepen our movement’s appeal to the hearts and minds of working people.
The rampant wealth and income inequality and its threat to democracy caused by trickle-down economics has created this opportunity.
There is no legitimate rock under which the Right can hide their wealth concentration agenda.
We know that economic growth cannot be an end in itself – we want growth because it can raise household incomes, it can lift our standards of living and it can broaden the variety of opportunities available to Australians.
But in the pursuit of economic growth, we cannot turn a blind eye to how that growth is distributed.
There are two schools of thought on this matter.
The first school of thought – which is exemplified by the Coalition Government, so I use the words ‘school’ and ‘thought’ generously – says that economic growth starts and ends with the already well off.
The top 10 per cent, the top one per cent, and the top one-tenth of one per cent of the income distribution are, apparently, specially-talented wealth creators.
Regardless of whether they’ve procured their income streams through inheritance, or entrenched market power, or successful lobbying and favourable legislation, the rich are rich for good reason – or so this theory goes.
Rather than challenge their legitimacy, we in politics should instead grant them any tax concessions that they’ve not already taken advantage of.
In this theory, questions of distribution – if they are ever asked – are quickly dismissed with the assurance that ‘a rising tide lifts all boats’.
This is the mantra of trickledown economics.
The second school of thought pictures economic growth and distribution as inextricable and self-reinforcing.
Rather than trickling down, the benefits of economic growth expand from the middle, outwards.
A strong working and middle class that receives fair pay for a fair day’s work, that can afford housing, education and health services and a social security system that alleviates poverty doesn’t simply reap its deserving reward when the economy grows.
It is in fact a prerequisite of economic growth.
This is the heart of Inclusive Prosperity, the antidote to trickledown economics.
Why Focus on Growth and Distribution?
I mention the distinction between economic growth and distribution for two reasons.
First, in a macro sense, the cruel lesson of economic policy in many Western countries since the 1980s is that growth hasn’t spontaneously ‘trickled down’.
It is no coincidence that the countries which legislated least to offset the concentration of income and wealth in the lead-up to the Global Financial Crisis have endured the most severe skill and capital destruction in its wake.
Australia’s much-celebrated 26 years of uninterrupted economic growth are often celebrated almost as some form of miracle of nature. But they are not.
They are product of choice, not chance, and in their very darkest hour – in the most severe global recession since the Great Depression, when that growth record was almost predestined to be broken – it was saved by the Labor government of which Jenny and I are proud to have been a part.
Further, the foundations of those 26 years of growth overwhelmingly owe to the concern of its Labor Governments for distributional issues.
In the policy sphere, these are most obviously embedded in our world-leading, tightly targeted tax and transfer systems, systems that Jenny has dedicated her life to enhancing and protecting.
The Hawke and Keating years are rightly admired for many reasons, but I’d argue that one of the greatest contributions of their Governments was their architecture of Australia’s social safety net.
Under Social Security Minister Brian Howe (and I think everyone here tonight knows why I mention Brian – and his brilliant staff!), the Hawke Government radically modernised Australia’s social welfare system.
While in other advanced economies throughout the 1980s and early 1990s inequality began its long upward grind, which culminated in the Great Recession, the changes enacted by Labor Governments nullified the increase in market income inequality that otherwise would have unfolded between 1983 and 1996.
Income support through the Family Allowance Supplement, rent assistance, and sole parent payments were allocated to the low income families who needed it most.
The percentage of Australians living in poverty fell.
Child poverty fell.
Funding for education, child care, health and public housing formed the cornerstone of the social compact which proceeded Australia’s era of uninterrupted – and unmistakably egalitarian – growth.
The savvy interventions of Hawke, Keating and Howe have meant that Australia has been able to provide health, education and social services that are characteristic of an advanced democracy, while spending substantially less than almost any other similar country in the OECD.
The second reason that the distinction between economic growth and distribution matters is that, in a political sense, it is writ large in the portfolios of Treasurer and Social Security Minister.
Any Labor Treasurer depends crucially on the Minister for Families and for Social Services to ensure that the policies conceived at a macro level have a meaningful effect on those they are designed to assist.
Labor Treasurers cannot hope to deliver sustained economic growth without the distributional foundations laid and maintained by Social Security Ministers.
In this often-unheralded duty of architecture, maintenance and delivery, few have demonstrated a more impressive record than Jenny Macklin.
Jenny has distinguished herself as an intellect and public policy expert of the highest rank, whose tireless work has improved the lives of countless millions of Australians.
Only Brian Howe, a Melburnian who represented the division of Batman – adjacent to Jenny’s electorate of Jagajaga – could lay claim to making strides comparable to Jenny’s in the Social Services portfolios.
In her more than two decades in Parliament, Jenny has expanded upon Brian’s legacy in making her own remarkable impact in this arena.
Crucially, Jenny has seen more clearly than most the necessity of economic growth that is inclusive, a theme which underwrote the fruitful collaboration between her office and mine when I had the privilege of working with her in Government between 2007 and 2013.
Of course, Jenny’s and my story starts long before our time in Government.
We served in the same Shadow Cabinets for almost a decade before the November 2007 election.
We were both members of the Priorities Review Committee, later the Shadow Expenditure Review Committee, during much of our time in Opposition.
In our cabinet interaction over twenty years, Jenny was like a big sister to me, I looked up to her and she looked after me.
Successful cabinet government requires strong relationships with colleagues.
Even when priorities clash mutual respect is the bedrock which gives people confidence to work together even when they disagree.
In almost every debate in that twenty-year period we generally agreed but if we didn’t Jenny got her way!
Despite our different factional backgrounds – although I’d still like to claim Jenny as a member of the Swan Left – we were able to establish a relationship of mutual respect and common purpose during our years in Parliament based on shared policy interest, not factional alliances.
When Labor came to Government, our productive relationship continued in Expenditure Review Committee deliberations.
As I’ve noted in my book, The Good Fight, the ERC is a gruelling process, where almost every minister will tell you why savings are impossible, and why they really need extra money for this and for that.
It won’t surprise you to hear that Jenny was an honourable exception. She was honestly the perfect ERC member.
She fought hard – really hard – for her priorities, but it was never about measuring success by portfolio size, or how much money she could get. It was about the policy and the results.
If she could get the same results with less money, she was the first to say it.
If she couldn’t, she would just tell you that. And you believed her, because you knew she had put in the hard work and run the ruler over her entire department.
It gave her an unparalleled authority in ERC, also to bring some other spending ministers into line! She was my best friend in the room, but in that ERC room, she would have been any Treasurer’s best friend.
The impact of Jenny Macklin on her portfolios and shadow portfolios will continue to unfold.
But today I’d like to reflect on just three broad areas in which Jenny has made her mark.
First, Jenny was integral to the conception and delivery of Labor’s response to the Global Financial Crisis.
Labor’s policies in this period are now widely considered to be among the best in the world, ensuring Australia avoided the recession that engulfed almost every other OECD country, even those which also responded with fiscal stimulus.
The size and timing of our first stimulus package adhered to that now well-worn counsel to ‘go hard and go early’, but it was the third pillar, to ‘go households’ which was key.
Of the $10.4 billion that our Government deployed in late 2008, $4.8 billion went to pensioners, $3.9 billion went to families, and $1.5 billion to housing.
With so much for pensioners, families and housing our advice might well have been ‘go hard, go early and go Jenny!’
The collaboration between Jenny’s and my offices was never more crucial than during that period of our Government.
Labor’s unapologetically Keynesian policy of targeted expenditure showed that economies can and do grow from the middle, outwards, rather than from the top down.
While the global events of 2008 provided one of the more tumultuous starts to an Australian Government’s term in post-war history, Jenny was one of many ministers who hit the ground running.
The speed and scope of Jenny’s reforms in her social services portfolios remain remarkable.
Although the GFC had made the task of searching for structural savings more difficult, Jenny and I were firmly of the view that we couldn’t afford to sideline a critical reform like Paid Parental Leave.
The result might have been modest – giving primary caregivers 18 weeks of leave at the national minimum wage – but it was affordable and, as a proud piece of Labor reform, it created a base to work from in the future.
Importantly like age pension reform parental leave was put in place despite the challenges of the GFC.
Jenny has advocated tirelessly for the preservation of Labor’s paid parental leave scheme despite savage attacks and baseless accusations of ‘double dipping’ from the Coalition.
It remains in place today.
Let me digress for a brief personal reflection, because I think it really exemplifies Jenny: Quite a few of you will know that Jenny is not just the policy wonk’s policy wonk, especially when it comes to families and kids.
She can dissect family and children’s policy with an efficiency and clarity and speed that are awesome to behold, and she was my tutor more than once when I took on the families portfolio.
She is also devoted to families in a completely different way, which is as the unofficial godmother to any child born anywhere at any time in her circle of friends, staffers, acquaintances and random passers-by.
I remember her turning up in my office one day unannounced, and I quickly wrapped up my meeting because I thought she wanted a chat on some important issue (I was a good Treasurer – always available to spending Ministers!).
She looked at me like yesterday’s fish-and-chip wrapper, and went back to grilling one of my staff for details about his son who had just been born: how he was doing, what he weighed, APGAR score, and most importantly, when he was being brought in for everyone (i.e. Jenny) to meet!
We’ve since seen Labor’s paid parental leave scheme become a key target of the Coalition government, which has sought to deprive new mothers of time with their newborn babies by blocking access to the scheme in the cases where employers would otherwise provide additional, priceless weeks of leave.
In 2009, Jenny enacted the most fundamental overhaul to Australia’s pension system, granting pensioners the biggest pay rise in its history.
Jenny engineered a pension increase for more than 3 million Australians, she commissioned and applied a new ABS index for pension payments and she instituted a new supplement for carers, who are some of the most overworked and underappreciated Australians in the non-market sector.
As Minister for Disability Reform in the Gillard and Rudd governments, Jenny brought the state and territory leaders around the table to enact the National Disability Insurance Scheme.
Jenny was instrumental in throwing public and political support behind the principle of the NDIS – so much so that our idea of funding the system through an increase to the Medicare levy was agreed to – even if reluctantly – by Tony Abbott.
I can say emphatically without Jenny the NDIS would not have happened.
Third and by no means last, Jenny’s advocacy for Indigenous Australians will in time be seen as the area where she leaves the strongest legacy.
As Minister for Indigenous Affairs, Jenny was pivotal in building a consensus with Indigenous leaders about the form and content of the Labor Government’s landmark apology to the Stolen Generations and in fostering a relationship which extended from reconciliation to social and economic justice.
Jenny’s tireless work in the Indigenous Affairs portfolio culminated in the development of the Closing the Gap framework, which has delivered record investments in health, education, housing, early childhood development, and remote service provision for Indigenous Australians.
Although the gaps that persist between Indigenous and non-indigenous Australians in health, employment, and mortality remain nothing short of a national tragedy, the Closing the Gap framework is a living, stark reminder to Governments of any stripe that their progress on Indigenous policy is the yardstick for their treatment of the most vulnerable in society.
Most importantly for the future – it gives failure no place to hide.
In casting my mind back ten years this evening, I’ve been invited to cast my mind back still further, to Jenny’s and my first speeches to Parliament.
Though these were 21 and 24 years ago now, the contest that they describe remains more relevant than ever.
Both of our speeches carved out the delineation between the neoliberalism of the Coalition and the ethos of Australian Laborism.
But they also offered a still-clear vision for the future of the Left in Australia.
Speaking in 1996, Jenny contrasted the inhumane economic rationalism of the newly elected Howard Government with the fundamentally compassionate and inclusive notion of active citizenship. I quote:
By embracing active citizenship, we commit ourselves to three things: first, that all members of the community are of equal intrinsic worth and that all should enjoy the same opportunities to recognise their full potential; second, that all members of the community have the right to organise; and, third, that people have a right to those things without which active citizenship is impossible, especially work, education and health services.
Coming to Parliament in 1993 with the national unemployment rate higher than 10 per cent, I cited a report from the Industry Commission which said that in combatting joblessness, the unemployed should not receive social assistance; that Governments should simply find a level playing field somewhere and all else would follow.
This laissez-faire approach to the labour market stood in contradiction to Labor’s belief that:
The best societies are those where the Government is always working to create conditions in which markets and industry can function, and where there are strong government social policies. The great strength of the Keating Government, and the Hawke Government before it, was that unlike the United Kingdom and the United States, in the 1980s Australia did not throw the baby out with the bathwater and completely adopt laissez-faire economics in all of its economic policies.
In the more than two decades since Jenny and I have entered Parliament, and in the decade since the 2007 Labor government was elected, the challenges that we face still echo down the years.
In the mid 1990s Australia was recovering from its worst recession in post-war history.
At the end of the 2000s Australia had avoided a recession and the associated loss of jobs, homes, and livelihoods. But we cannot be complacent.
In 2017, Australia faces the challenges of automation, of youth unemployment, of housing affordability, and of continuing to provide first class health care and education.
Throughout all of this, the distinctions between the Labor Party and our opponents could not be starker.
Labor is the only party that will look after working Australians, for families, for the unemployed, for the aged and for the sick, and it is the only party that will fight for the institutions that are the hallmarks of the Good Society – Medicare, a dignified minimum wage, and a decent social security system.
People fight for, vote for and defend the legacy of Labor Governments because the beating heart of Australian Laborism is one of Inclusive Prosperity.
While it’s lately been fashionable among economists to talk about economic equality laying the foundation for economic growth, this truth has always been self-evident for Australian Labor.
It finds its embodiment in Jenny Macklin, who epitomises that combination of passion, compassion, political judgment and policy savvy that is essential to effect profound and lasting change.
Next year marks the tenth anniversary of the Global Financial Crisis.
Within the past year, both our current Prime Minister and his Treasurer have explicitly tried to discredit Australia’s Keynesian policy response to the GFC.
The strength of our democracy stems not just from our actions during the GFC, but because for over thirty years median household incomes in Australia have done much better than virtually any other advanced economy.
The difference between us having a Hanson in the Senate and the United States having a Trump in the White House is as simple as the difference between them having thirty years of wage stagnation and us having thirty years of wage growth.
But in recent years it’s become clear we’re not immune to the sorts of economic trends which have brought other Western liberal democracies to the brink.
If we are to avoid going down the American road of rampant inequality and a hollowed out middle class, we need sensible fiscal and monetary policy to sustain full employment. Full employment must be the central objective for a progressive party.
We need polices which give a stronger voice to working people and build a world leading progressive taxation system.
We need corporate governance reforms aimed at taming corporate excess and encouraging long term investment over short-term speculation is a high priority.
We know tackling inequality isn’t a technical problem; protecting working people is our historical task and shared prosperity has always been our party’s sacred mission.
We won’t win the battle of ideas unless we are steadfast and consistent in the presentation of a progressive framework for a greater voice for working people.
Of course in honouring Jenny as we do tonight, her political activism is the embodiment of these ideals and is an example for future generations to come.
I’m proud to call her friend, colleague, comrade, and we are all the richer for knowing Jenny and having her in our public life. Congratulations Jenny!