Penny Wong

by Simons, Margaret;

  The vote was 71–31 in Gillard’s favour – but Rudd had won almost a third of the caucus. The leadership issue was far from resolved. Meanwhile, the thwarted challenger moved to the backbench, and the Gillard government lurched on, dipping ever lower in the polls.

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  As the minister for finance in the last three years of the Labor government, Penny Wong was central to its economic decision-making. Finance minister is usually a backroom job, devoid of glamour. She was described as a ‘Dr No’ figure, her role being to restrain the spending programs of other ministers.36 In public she was often understudy to the treasurer – initially Wayne Swan and, in the government’s dying days, Chris Bowen. Having been criticised for wooden communications on climate policy, she now appeared most often on the heavy current-affairs programs – doing long set-piece interviews with the ABC’s Emma Alberici or Leigh Sales. These encounters were a measure of changes in public life since she had first been dismissed as a ‘lipstick warrior’ upon entering the Australian parliament. There were senior women on both sides of the desk – both at the top of their game, both playing hard.

  But Don Watson would have found little in her media appearances to rebut his view of her as a purveyor of dead political language. Certain rhetorical tricks had become trademark Penny Wong. ‘Let me just say this,’ she would often begin a response. Or ‘What I would say is …’ Or ‘The point is …’ All were ways of reframing a question to suit the government’s narrative. There was another verbal tic she developed during this time, and continues to use today. When praising a colleague, she will describe them as ‘the best of our generation’. She used it in the interviews for this book regarding Jay Weatherill, who she described as the best politician ‘of our generation’. She used it after the 2019 election when endorsing Albanese for leader of the party – he was ‘the outstanding parliamentarian of our generation’.37 It is a powerful form of words in isolation. Once you are aware that it is also a Wong formula, it loses some of its impact.

  As finance minister, underlying her rhetoric was the hard fact that she was often sent out to do a tough interview when the treasurer was unwilling. As well, despite her power and senior position, Wong was navigating conundrums she had inherited – the mining tax, the carbon tax (as it became known under Gillard) and, most of all, the government’s firm promise that it would deliver a surplus in the wake of its big spending to ward off a recession during the global financial crisis. The surplus became a retreating chimera and was never achieved. For most of this time it was clear that the Labor government was on the way out, a victim of self-inflicted damage. It was a miserable time and a tough job. In Wong’s public appearances there were not many jokes and very few smiles, except ones of incredulity or contempt when talking about the opposition.

  In 2010 the treasurer, Wayne Swan, and new prime minister Julia Gillard had announced that the government would return to surplus by 2013. They based this on a Treasury forecast that turned out to be wrong. It was predicated on an optimistic prediction of how tax revenues would rebound as the country recovered from the global financial crisis. Despite Labor’s success in avoiding recession through stimulus and spending, recovery was sluggish. Nevertheless, long before Penny Wong took on the finance portfolio, the government had harnessed its economic credentials to the promise, and even as figures flowed in through 2011 and 2012 that suggested a surplus was unachievable, Gillard and her cabinet continued to talk about it in absolute terms. ‘Failure is not an option,’ Gillard said. Wong echoed this sentiment, including it in her John Button speech and in many other public appearances.

  In December 2012, Wayne Swan finally abandoned the ambition of a budget surplus in 2013, saying that it would now be achieved in the 2015–16 financial year. The continued commitment to a surplus had always been a political rather than an economic necessity. The economy was strong, with low unemployment, low interest rates and steady growth, but the promises made by Gillard and Swan – and repeated by Wong – meant that Labor’s credibility was undermined. Postponing the surplus in the lead-up to the 2013 election played directly into opposition leader Tony Abbott’s narrative. Labor could not be trusted with the nation’s economy.

  Today Wong says the mistake was in making ‘a political commitment out of a forecast’ and then retreating from it too late. She says she became aware of the sluggishness of revenue only through the budget processes in 2011. At that stage, the government should either have made much deeper cuts to deliver the surplus or abandoned the promise, doing its best to explain the reasons why.

  Wong also inherited the mining tax, which had become a fiasco. The mining industry felt it had not been adequately consulted and had mounted a scarifying campaign against the tax in Rudd’s last days as leader. In their respective memoirs, Rudd blames Swan, and Swan blames the mining industry, Treasury, Rudd and, to a lesser extent, himself.38 Paul Kelly’s verdict is that ‘Labor got the timing, the design and the politics wrong’. As treasurer, Swan had not adequately consulted, but Rudd had also failed to pay sufficient attention. ‘The whole saga is an irrefutable instance of a decision-making shambles,’ Kelly concludes. In his opinion, if Rudd had got the tax right, he would probably have been able to lead Labor to victory in 2010 despite the damage done by his retreat on climate change.39

  By the time Gillard took over the leadership in June 2010, the issue was inflicting mortal damage on the government. One of her first acts was to defuse it. She and Swan negotiated with the big mining companies. They needed a fix, and needed it fast. The government was in a weak position. The mining industry effectively co-authored the revised tax model. It was based on optimistic forecasts of commodity prices, which meant it was modelled to raise only a little less than the original. That proved too good to be true. Commodity prices fell, and the design of the tax meant that it raised almost no revenue. Nevertheless, the forecasts in 2010 meant Labor regained some credibility, and was able to maintain the bold predictions of surplus in the election campaign.40

  The mining tax saga, she says today, highlights the ‘stupidity’ of the decision to drop the CPRS. ‘So we are going to get rid of a price on carbon that we have said for years is the most important thing, and instead introduce a tax that nobody has ever heard of and doesn’t understand the reasons for? Not great political strategy.’

  The deal done by Gillard and Swan had to be made in a hurry ‘because we were bleeding’, but she remembers that after the election, when the mining tax revenue figures were released, the shadow assistant treasurer and shadow minister for financial services, Mathias Cormann, mocked her across the Senate chamber, saying that only Labor could design a tax that didn’t deliver any money. She felt the sting in his words.

  In this environment – shackled to the promise of surplus, with revenues constantly dropping below forecasts and a mining tax not worthy of the name – the government still delivered reforms. Minister for Families, Community Services and Indigenous Affairs Jenny Macklin steered through means testing of family tax benefits and of the private health insurance rebate, as well as a paid parental leave scheme. There were extra family benefits, a Schoolkids’ Bonus, aged-care spending and income tax reforms to help low-income earners. Gillard also pursued two reforms – her attempt to set her own stamp on the government. These were the National Disability Insurance Scheme and a new model for school funding that arose out of the Review to Achieve Educational Excellence in Australian Schools, commonly known as the Gonski report.

  The government committed to offset all new spending with savings. Getting the savings was largely Wong’s job. This is where she became ‘Dr No’.

  Ministers remember her as the chief cross-examiner at Expenditure Review Committee meetings. They learned to dread these encounters. Wayne Swan recalls, ‘Penny Wong did more than anyone to ensure we achieved [offsetting of new spending]. Ministers by this stage had become ashen-faced at the mere mention of the Expenditure Review Committee meetings … it was not uncommon to ask ministers presenting
a spending proposal to also provide the offsetting saving. Sometimes, ruthlessly, we accepted the saving proposal but then didn’t approve the spending proposal.’41 Allan Behm was at this stage chief of staff to Greg Combet, the minister for energy and climate change, and thus working on the implementation of the climate-change package that had been negotiated with the Greens. The detail was complex. There was the management of the carbon accounting and carbon credits regime; there had to be compensation packages for low-income households, with social-security implications. There were plans for methane capture from tips and numerous other measures. All of it had cost implications. Penny Wong was involved in meetings with multiple ministers, nutting out the detail. She was, Behm remembers, ‘so completely professional’ in managing the pressures on the budget while recognising the priority the government was giving to action on climate change. ‘Swan might have committed to the surplus, but it was Penny who had to try and deliver it. She would ask the right questions and exert discipline. People could come along and say, you know, “We’re going to need X, Y and Z to be able to do A, B and C.” And she would test every demand, and quite trenchantly. I mean, she’s a formidable arguer.’

  It wasn’t enough. The 2010–11 federal budget, compiled before Penny Wong became finance minister, forecast a $41 billion deficit that ended up at $48 billion. The next year, when she was in the job, the deficit was predicted to be $23 billion but the outcome was $44 billion. For the 2012–13 financial year, Labor forecast a surplus of $1.5 billion that became a $19 billion deficit. For 2013–14, its last year in government and after Swan had admitted the surplus could not be achieved that year, Labor forecast a deficit of $18 billion that was quickly revised upwards, to $30 billion.42 When Kevin Rudd resumed the leadership and Chris Bowen replaced Swan as treasurer, one of the first things they did was to hold a mini-budget that deferred the return-to-surplus promise by yet another year.

  Throughout this, Penny Wong held the line, echoing Gillard and Swan, and later Bowen. In March 2012 she was promising that the mining tax would raise enough money to cover the government’s promises, insisting that all the variables had been factored in.43 After Swan’s December 2012 admission that the surplus timetable could not be met, she fronted ABC journalist Chris Uhlmann to face a barrage of difficult questions. ‘The key to this decision today is responsible economic management,’ she said. ‘The key to this decision today is jobs and growth … What we can be absolutely trusted on is we will always be … the party that puts growth and jobs first. And the evidence is the way we have managed the economy in the face of the worst global downturn since the Great Depression.’44

  And in the wake of the May 2013 federal budget, it was Wong who fronted Emma Alberici on Lateline to explain the deficit. Why had Labor not taken a more cautious approach when it was clear revenue was not coming in, asked Alberici.

  Wong did the best job she could with a terrible hand. ‘Well, making a couple of points. The first is this, that we actually did take a more conservative approach, but what has occurred is an even bigger hit to revenues than was anticipated. And this is not a conspiracy … what we’ve seen is the largest write-down of revenue for a very long time.’45

  It was punishing stuff, awful to listen to and, while she does not admit this, awful to have to deliver. By now, everyone knew the government was in its dying days. The only question was the scale of the impending defeat.

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  By 2013 both the architects of the Machine power-sharing deal within South Australian Labor were in federal parliament: Don Farrell, of the Right, as a senator, and Mark Butler, of the Left, as member for the lower-house seat of Port Adelaide. Butler had entered parliament in 2007. The allocation of this safe seat to him was one of the Machine’s benefits to the Left.

  As the 2013 election approached, a factional brawl erupted in South Australia. It tested the limits of the Machine deal, and pitched Penny Wong against Don Farrell. In some ways, this wasn’t a surprise: they had been circling each other for years – in so many ways opposites, other than in their shared commitment to the party.

  Farrell came from a family steeped in Catholic values. If South Australia Labor had split in the 1950s, his family would probably have been with the Democratic Labor Party. He was also a parliamentary secretary – junior to Wong in terms of party position but more senior in factional terms. His support had been important to Gillard when she replaced Rudd as prime minister. This was generally thought to be the reason why Gillard opposed same-sex marriage – as part of a backroom deal made with Farrell. Though he had virtually no public profile, within the party he was a key powerbroker, and had been Wong’s antagonist in the push to change the South Australian Labor Party position on same-sex marriage.

  In late 2012 he moved on her again. Had he been successful, Penny Wong probably would not be in the parliament today.

  At the South Australian state Labor conference in October 2012, the Right’s Joe de Bruyn, a vehement opponent of same-sex marriage, organised the votes to unseat Penny Wong from the number-one position on the Senate ticket, in favour of Farrell. Farrell won the top spot easily: 112–83. This was evidence of Farrell’s power, but also showed that Wong had her enemies within the state party, with the remnants of the Centre Left as well as the Right voting against her. Why was Gillard happy to have Don Farrell in the number-one spot?

  Wong says today, coyly, ‘You would have to ask Julia Gillard.’

  After the conference, Gillard told the media that Penny Wong was ‘an incredibly important member of my team’ but refused to say whether she thought Wong should lead the ticket.46 These comments, made in the same month as her notorious speech attacking Tony Abbott’s misogyny, allowed for the opposition’s Christopher Pyne to accuse Gillard of hypocrisy – of failing to support other women.47

  At the time, these factional maneouvrings weren’t seen as a bid to end Penny Wong’s career. Labor expected to win at least two South Australian Senate spots, so second place on the ticket was presumed safe. But it was a humiliation.

  Anthony Albanese was furious on Penny Wong’s behalf. They had grown closer over the years. In his view, she had had to overcome immense barriers as a left-wing Asian lesbian woman, and she had done so without asking any special favours. She was also an individual of ‘courage, character, policy depth’, with the right combination of pragmatism and principle. ‘If she was a straight white man she would still be outstanding.’ In his view, it was ‘absurd’ for the low-profile Farrell to be placed above Penny Wong, the minister for finance, on the Senate ticket. ‘There shouldn’t have been any argument over it,’ he says today.

  Albanese went to see the prime minister. He recalls, ‘It was one of the few arguments I ever had with Julia. She asked me to back off, basically, and I told her I wouldn’t be doing that … In my view it was just absurd, and it wasn’t about Julia or Rudd or leadership or anything else. It was about the Labor Party having to be mature and sensible. You had this outstanding public figure versus Farrell, who is a good person but very much a backroom figure.’

  Albanese says that his advocacy was not at Penny Wong’s urging. ‘She wasn’t asking me to do anything. Far from it. It was my decision and my call to do it … I thought people would back off, but everyone doubled down, so I doubled down.’ He threatened to take the issue to the national executive and seek an intervention to reverse the decision. It wasn’t necessary. In October 2012, a few days after the ticket was announced, Farrell backed down and announced he would give up the number-one spot to Penny Wong out of concern that the issue was damaging the party.48

  Most thought this dispute was largely about form and protocol. But Chris Schacht, whose political career had been ended by Penny Wong’s rise years before, remembers thinking that Don Farrell might have made a serious mistake. Schacht had made a hobby out of analysing the vote for the Senate – partly because of his conviction that Wong was not a vote-winner. He thought it was quite possible Labor would not get two seats. He was right. />
  Gillard began 2013 by announcing the election date almost nine months in advance. Leadership rumblings began again early in the year as the government dived in the polls – there were rumours that Kevin Rudd was again planning to challenge Julia Gillard for the prime ministership. In March, Simon Crean called a leadership challenge, hoping to flush Rudd out. Gillard called a spill but, in the absence of a challenge from Rudd or anyone else, was re-elected unopposed. Penny Wong, as the numbers were counted for the spill that didn’t happen, was reckoned as one of those sticking with Gillard.

  But by June, in the aftermath of a federal budget that Penny Wong was sent out on the media trail to support, the government’s standing in the opinion polls had collapsed again. Labor was headed for a wipeout. The polls indicated that Kevin Rudd had a better chance of winning public support than Julia Gillard. Rudd declared to those urging him to challenge that he would do so only if key cabinet ministers were to prepared to announce they would back him. The ministers he nominated included Penny Wong, Bill Shorten, Greg Combet and Jenny Macklin.49

  Penny Wong had been one of Julia Gillard’s most public supporters, although behind the scenes their relationship was often difficult, due to their differences over the CPRS, same-sex marriage and, most recently, Don Farrell’s attempt to secure the top place on the Senate ticket.

  Mark Butler and Penny Wong talked about the leadership, as had been their habit over so many years, and as they had the last time the office of prime minister was in doubt, when Gillard replaced Rudd. Butler recalls, ‘There were no angels in all that period. What people did to Kevin was incredibly stupid and did Julia no favours ultimately either. And now we were in that situation again, and we were trying to work out what to do.’