Alan Austin concludes his three part analysis of Labor's GFC legacy eight years on, with history's verdict.
The Rudd legacy — 8 years on (Part 3 and conclusion)
THE CABINET led by PM Kevin Rudd knew in 2008 what they would cop when they implemented the hefty stimulus packages which rescued Australia – alone among rich countries – from the devastation of the global financial crisis (GFC).
They foresaw condemnation from the Coalition and the mainstream media for putting the budget back into deficit, for increasing the debt, for hand-outs splurged on alcohol and for any industrial fatalities in the $26 billion infrastructure projects.
“We all inherently knew that there was this potential liability for Labor ... that it would play out as a waste and mismanagement story.”
— Deputy Prime Minister Julia Gillard in 2008
PM Kevin Rudd addresses the nation on the coming global financial crisis, 12 October, 2008.
They could not have imagined just how malicious, mendacious and sustained that campaign would be.
Fortunately, the watching world saw the reality — that Australia’s rapid action worked extraordinarily well. Economists worldwide are virtually unanimous:
‘While European countries implemented austerity measures worsening social conditions of their population and pushing the economy into a fallacious fiscal adjustment, the prompt reaction of the Australian government limited the possible negative effects caused by the macroeconomic shock and favoured the process of economic recovery.’
~ UNICEF consultant Bruno Martorano
‘Kevin Rudd ... put in place one of the best-designed Keynesian stimulus packages of any country in the world. He realized that it was important to act early, with money that would be spent quickly, but that there was a risk that the crisis would not be over soon. So the first part of the stimulus was cash grants, followed by investments, which would take longer to put into place. Rudd’s stimulus worked.’
~ Professor Joseph Stiglitz, Colombia University, Nobel Prize winner
Stiglitz, Australia 2014: "PM Rudd took effective action. Had the best designed stimulus package. Saved Australia going into recession."
Australian economists not paid to lie by the Murdoch empire concurred:
“As a tool of economic policy, the stimulus ... played a central role in making sure that Australia suffered less of a downturn than most other developed countries.”
~ University of Sydney's Emeritus Professor Rodney Tiffen
“I think the Australian response to the crisis was well-judged and highly successful. It’s depressing, though understandable, that the Australian public doesn’t realise what a good job was done and what a bullet we dodged.”
~ Professor John Quiggin, University of Queensland’s School of Economics
Quiggin recalls that the majority of economists backed Rudd’s plan:
“I think it also reflects well on the Australian economics profession. The stimulus policy had overwhelming support from the profession and the outcomes justified this.”
"World's greatest Treasurer" former PM Paul Keating tells Tony Jones "it's a catastrophe". Published 5 February 2009.
Heads of government and of treasuries worldwide regard Rudd as one of the few who knew what to do:
“Kevin Rudd was one of the first leaders who realised that we were in a long term crisis that was quite fundamental, that it had ramifications right across the world.”
and
“I think Prime Minister Rudd is incredibly, is A+ on these issues. If we did what he advised (in 2008), we'd all be in a better place.”
~ Former UK Prime Minister Gordon Brown
“This was the prime minister of Australia, a long ways away, coming into my office and wanting to have a serious discussion about what was going on. And he [Kevin Rudd] understood not just the politics. He understood the economics.”
~ U.S. Treasury Secretary Henry Paulson, the man at the epicentre of the GFC in 2008
Those world leaders credit Rudd not only with saving Australia, but guiding the global response:
“We had decided that this financial crisis was far deeper than people had imagined it to be, that there had to be coordinated international action to deal with it, and there had to be an international organinisation capable of doing so, which eventually became the G20. Kevin was absolutely central to these discussions.”
~ U.S. Treasury Secretary (2009-13) Timothy Geithner
Global agencies singled out Australia as having acted fast enough, with enough money and targeted in the right areas:
“Even though many countries moved quickly to enact large fiscal stimulus packages, these packages generally have not had a strong effect in cushioning the initial decline in employment caused by the crisis, although Australia is a notable exception.”
~ OECD Employment Outlook 2009
“International financial institutions strongly endorsed Australia's response to the GFC. IMF commended the 'quick implementation of targeted and temporary fiscal stimulus' considering that it provided a sizeable boost to domestic demand in 2009 and 2010.”
~ Committee for Economic Development of Australia CEO, Professor Stephen Martin
Some Australian agencies also acknowledged this truth, despite it running counter to the screaming media narrative:
“The fiscal stimulus has clearly helped. Australia went hard and went early and put resources in the right places. As a result, Australia was the only advanced country to have reported positive through-the-year growth to June 2009. It's no wonder the international commentators have been talking about Australia's ‘miracle economy' going from ‘down under to down wonder’.”
~ Australian Trade Commission’s Tim Harcourt
Happy Birthday GFC! Five years on in August 2012, the GFC showed no sign of ending soon.
Elements within the conservative establishment which resisted the Coalition/Murdoch campaign of misinformation believed Labor’s policies were right:
"Certainly the Chamber was seeking a major stimulus package in the order of two per cent of GDP and from what we understand from this package it is in that order.”
~ Australian Chamber of Commerce and Industry's Greg Evans
“The package targets consumer spending, which is absolutely critical to our near-term economic prospects, and boosts capital expenditure – looming as one of the real casualties.”
~ Australian Industry Group’s Heather Ridout
Even his political enemies admit Rudd was right regarding the GFC:
“Kevin Rudd is a man of tremendous strengths, and they came to the fore during the global financial crisis ... Australia did not go into recession and that's a great credit to Kevin and also to (former treasurer) Wayne Swan.”
~ Julia Gillard
The person probably best able to assess the Rudd Government’s response to the GFC was Treasury Secretary at the time (appointed by John Howard in 2001) Dr Ken Henry:
“I think it is extremely likely that he [Kevin Rudd] was better prepared for this stuff than any political leader anywhere else in the world. At the end of the day, somebody has to make the judgments. In the political system we have, that person has to be the prime minister ... I said to him subsequently that I thought his instincts were better than mine. And I still think that.”
You can follow Alan Austin on Twitter @alantheamazing.
You can read Part 1 here and Part 2 here.
How Tony Abbott & Coalition responded to Rudd/Gillard's GFC policies and other "potential" legacies like NBN and climate change action.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
Monthly Donation
Single Donation
Support quality journalism. Subscribe to IA for just $5.
