Australia not ready for the next financial crisis: Wayne Swan

Former Australian Treasurer Wayne Swan

Former federal treasurer Wayne Swan says the biggest threat to Australia's economic future, in case there is another global financial crisis (GFC), would be a liberal government.

Ten years after the collapse of global financial services firm Lehman Brothers triggered the collapse of financial markets in the United States, Swan has reflected on the crisis that engulfed the world, including Australia.

Mr. Swan was the treasurer under the government of Kevin Rudd at the time and says that had it not been for his stimulus package of 42 billion dollars, Australia would not be so "well located" economically in 2018.

However, Mr. Swan says Australia must be willing to take such decisive action in the event of another financial crisis.

"The lesson for us is to be willing to use fiscal policy again, if necessary, as we did 10 years ago, and what I despair of when you listen to ministers like Mr. [Mathias] Cormann, they're slandering the approach we took 10 years ago, "Mr. Swan told SBS News.

Kevin Rudd talking about the $ 42 billion government stimulus package on February 6, 2009.


"I am afraid that the greatest threat to the future of Australia, if there is another international disaster, will be the Liberals, who will not take the kind of decisive measures we took 10 years ago to protect our people," said Mr. Swan.

The stimulus package was designed to avoid recession and limit job losses during the GFC. The Labor government handed out bonuses to low and middle income workers worth up to $ 950.

Both Mr Rudd and Mr Swan accredit him for successfully driving to Australia through GFC.

The Liberal Party has continuously rejected such suggestion.

In June of this year, Malcolm Turnbull told ABC that it was the Chinese stimulus and the large amount of cash John Howard had "left in the bank" that guided Australia through the GFC.

But Swan says the only reason why the Australian economy has continued to grow is because the Rudd government avoided a second recession 10 years ago.

"I think Australia, as we were 10 years ago, is still well positioned, the Australian economy is 30 percent bigger than it was at the end of 2007, largely, but not exclusively, because we did not suffer a recession. 2013, we were 15% bigger as an economy than in 2007 ".

"So Australia in protecting our economy, in securing the future of small businesses in particular, and avoiding wholesale unemployment has had a much stronger economy than any other developed economy," Swan said.

Australia has maintained 27 years of consecutive growth, but the rate of expansion has slowed.

The trajectory of expansion, 27 years without a technical recession, which is defined as two consecutive quarters of negative growth, means that it holds the record for the highest economic growth in modern history.