Gentlemen, thank you both for joining us.
Wayne Swan, to you first. What is the big lesson you've learned from the Global Financial Crisis?
What would you have done differently?
What I learned from the Global Financial Crisis was how important it was
to deploy fiscal policy to keep people in jobs
And the fact that we did that means that we came out in a stronger position
So as we go forward we always have to have fiscal policy to the fore
But what I found that was different from anything that I'd previously experienced
Was as we came out of the Global Financial Crisis,
Was the unwillingness of major players in the economy and big corporates
To cooperate on the essential structural reforms we needed to ensure further growth
In our country and in the global economy.
For example, the business community and their approach to carbon pricing
an absolutely fundamental reform
They're largely on board aren't they?
No, they weren't on board then, and they're not necessarily on board now - but we put it through
But what I leaned was, that big money and big corporate power in not
necessarily on board for a set of policies which not only grow the economy,
but fairly distribute
But is there anything you'd have done differently, even down to how you spent the money
in stimulating the economy
There's no question that there were some programs that didn't work as well as they should have
But overwhelmingly, if we look at the expenditure of the stimulus it produced the results
In a broad range of areas
So stimulus would be the way to go if there's another crisis like this;
Do you agree with that, Ed Balls?
Well the interesting thing, if you read the reports this year,
The IMF and the OECD, about the Australian economy, they both say:
If growth slows markedly, then the government should stand ready to use fiscal policy
to support growth
So it shows the international consensus is shifting
The fact is back in 2008, 9, 10
Britain, Australia, America
We were all right to use fiscal action
To avoid a depression like the 1930s
With cuts in monetary policy
The difference was, in Britain, we stopped in 2010
Wayne carried on, Australia avoided a recession
We, I'm afraid had a period of very slow growth
And our national debt kept rising and rising and the deficit stayed high
So I think Australia got it right.
We started in the right place and absolutely, if there is another big crisis,
I think the international institutions now know
Fiscal action, along side monetary action
Is necessary to stop depression
But even if there's not another crisis, you're both arguing
We've got to do something now about inequality
to get the middle-income and low income earners earning more and
you've suggested, essentially more stimulus, more infrastructure spending and so on
Certainly suggested more expenditure
Not only in physical infrastructure but also in human infrastructure
That all costs money. Yes it does. That all adds to the debt.
It may add to the debt in the short term, but if you look at the analysis done by the IMF
Their analysis shows that countries with balance sheets like ours
When interest rates are so low,
Will grow more strongly and will produce a debt reduction dividend.
For ten years now, debt has been getting near half a trillion dollars in this country
I'm not really sure where it is in yours (Ed Balls)
But at what point is too much debt a problem?
Well, David, I'm not arguing that we shouldn't be doing budget repair
We clearly should. But at the same time,
We should be borrowing to invest in that productive infrastructure
Which will drive growth and which will make sure that debt doesn't accumulate
As quickly as otherwise would
Yes, there is budget repair that needs to be done.
The Labor party has cooperated with the government on elements of that budget repair
Because we understand you need a sustainable budget over time as well
But they've got a blanket view about public investment
It's ideology that gets in the way here
The reality is that one country can't do it on its own.
What we're saying is every country needs to do its bit
and there are some countries which are in a stronger position
The reality was that Germany, for example, could have done more to support growth in the EU
And across the world, than it has done in the last 10 years
I think America could have done more in the last 5, 6, 7 years
Australia did a lot, in Britain we started
There's been a shift in recent years when the government realised they need to do more
Well you talk about countries working together, that brings us to the issue of trade
Now, there's no doubt that for whatever reason, there has been a backlash
Against free trade. We've seen it with Trump, we've seen it in your country - in Europe
Brexit is partly due to this as well
What are your thoughts now on free trade, Wayne Swan, because you did say
here today that it is on the nose
Well certainly, on the nose - and we're a great trading nation
And it's in our interest to get public support
For trade agreements that increase our growth and our national wealth
and our national living standards
But if we sign up to those agreements, we can't leave people behind
When they are adversely affected - and that's what's occurred
Particularly in the United States
In that country they've had an absence of a range of programs which do exists in this country
To help us assist workers
Here we see car makers, for example, do we sign these trade deals
our car makers - what do you do to help those people?
Well it was an act of vandalism for the government to drive
Out of Australia the last two car makers
And I believe that was one of the decisions which really put trade agreements
absolutely on the nose.
But is continuing to protect industries like that really the answer?
I think in Britain the car industry
benefiting from trade has been one of our fastest growers in the last 10 years
We now have... It's different here though
I'll take a different example I suppose
In your country, do you keep protecting industry, is that the best approach?
If you say to populations:
globalisation is just what it is
it may mean stagnant wages and growing inequality
But it's the best you're gonna get so you'll have to put up with it
I'm afraid what you see is populations saying no, voting for Donald Trump or for Brexit
On the other hand,
To turn our fates against global trade and all those things
is disastrous, so you've got to have policies
which make trade fairer, which tackles companies who aren't paying their fair share of tax
and make sure you've got the kind of programs Wayne talked about
to boost wages
and support workers and give them the security
so that they can make globalisation work for them
Gentlemen good to talk to you both, thank you.