Role reversal from Swan and Hockey

For a man who could reasonably lay claim to being the most successful economic minister in the developed world, Wayne Swan sounded oddly like an opposition politician yesterday.

In debating Joe Hockey at the National Press Club, he was cranky, defensive and argumentative. It was the opposition candidate who sounded more like a successful incumbent. Hockey was positive, expansive and spoke optimistically of his plans.

And, insofar as either man addressed the future needs of the Australian economy, it was, again, Hockey who sounded more like a leader.

Swan did a reasonably good job of driving home the government's success in managing the economy through the global recession. And he did a decent job of putting the federal debt into perspective. The federal debt would peak at 6 per cent of GDP, Swan explained, "which is like someone who earns $100,000 borrowing $6000". Entirely manageable, in other words. By contrast, the average for the world's main economies is a dire 96 per cent of their GDP.

But while Swan was obviously braced for a Hockey tirade against Labor's debt and deficit, the shadow treasurer did not oblige. Hockey wrong-footed him by declaring that he had never been so positive about Australia's destiny and then set out a plan to exploit the country's economic good fortune.

This was an intelligent and powerful way of giving substance to the opposition's claim that it is "ready to govern''.

Australia's biggest looming challenge is productivity. In a speech last week, the eminent economist Ross Garnaut made two vital points.

One: "Without productivity growth, there can be no reliably sustainable increases in the material standard of living."

Two: "There has been no successful major step in productivity-raising reform since the tax changes associated with the introduction of the GST in 2001." Indeed, Australian productivity growth has been zero since 2002.