Wong Defeats Race-Sex Prejudice as Minister Set to End Deficit

Australia’s finance minister may need to reprise the toughness she showed in overcoming racial abuse and gaining control of a university political club to succeed in her new role.

Penny Wong is now charged with meeting Australia’s goal of becoming the first major developed nation to return its government budget to surplus. At stake: sustaining investor confidence in a country that avoided a recession during the global crisis and now seeks to end its deficits by fiscal 2013. Wong’s main mission is holding the line on cabinet colleagues’ budget requests to maintain a 2 percent cap on spending growth.

“She will have no problems saying no” to funding requests, said George Karzis, whom Wong ousted in 1989 as head of the Labor Club at the University of Adelaide, South Australia, and now works at law firm Norman Waterhouse in Adelaide. He said the two had embarked on a “campaign of enthusiastic recruitment” of new members to help gain control of the club, with Wong emerging the victor.

Australia’s economic growth, accompanied by the lowest debt-to-gross-domestic-product ratio among advanced economies, has helped make its dollar the second-best performing major currency this year, climbing about 8 percent against its U.S. counterpart.

The economy, which is now in its 20th year of expansion, surged 1.2 percent last quarter, the fastest pace since 2007 as growth spread from the mining industry to households.

Smaller Deficit

Wong started her job last month with one advantage: The deficit has so far turned out to be smaller than the government had anticipated. The shortfall was A$54.8 billion ($53.2 billion) in the fiscal year that ended June 30, compared with a forecast in May this year of A$57.1 billion.

“The key is to ensure we get the budget back into surplus and ensure the strict spending rules,” Wong, 41, said in a telephone interview on Sept. 28. “We have to deliver fiscal consolidation and that will require enormous discipline.”

Wong was born in Kota Kinabalu in Sabah, Malaysia, to a Cantonese father and an Australian mother. Her parents met at the University of Adelaide when her father traveled to South Australia on a scholarship in the 1960s and returned to Malaysia together. When they separated, Wong moved to Australia at age eight with her mother and brother.

Wong’s brother died 10 days after her election to parliament in 2001. In her maiden speech the following year, she made reference to his passing, saying, “Your life and death ensure that I shall never forget what it is like for those who are truly marginalized.”

Photographer: Jack Atley/Bloomberg

Australia's Finance Minister Penny Wong standing for a photograph in Sydney. Close

Australia's Finance Minister Penny Wong standing for a photograph in Sydney.

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Photographer: Jack Atley/Bloomberg

Australia's Finance Minister Penny Wong standing for a photograph in Sydney.

Migrant Difficulties

Wong alluded in her speech to the difficulties migrants faced when she arrived 25 years earlier.

“It was a hard time to leave a familiar place and come to somewhere where you and your family were seen as so different,” she told lawmakers. “Racial abuse was not unusual. It used to lead me to wonder, ‘How long do you have to be here and how much do you have to love this country before you are accepted?’”

Australia’s discriminatory immigration program, known as the White Australia policy, was completely dismantled in 1973. As late as 1988, John Howard, who went on to become Australia’s second-longest serving prime minister, called for reduced Asian immigration for the sake of “social cohesion.”

Wong wasn’t deterred. She won a scholarship to Scotch College in Adelaide, where Prime Minister Julia Gillard also hails from, and later became a captain of the school, the most prestigious position for a student. Di Hill, deputy principal at the time, recalls that some other students viewed the young Wong as “different” and she got “some teasing” as a result.

‘Intellectually Smart’

“Penny always said what she thought, in a way she probably wouldn’t now as a politician,” said Hill, whose husband, Robert, was a cabinet minister under Howard and who says she encouraged Wong to enter school politics, a process that ended with her being elected president of the student representative council by a record majority. “Sometimes that could aggravate people. She’s incredibly clever. Intellectually smart.”

Wong planned to become a doctor after graduation, winning a spot in medical school before deferring to go overseas. She returned to the University of Adelaide a year later and studied arts and law.

“I did a gap year and did some work in hospitals in Brazil and decided medicine wasn’t for me,” she said in the interview. “Not liking the sight of blood was one of many reasons.”

Wong worked part-time as an organizer for the Construction, Forestry, Mining and Energy Union through the concluding stages of her law degree, while still managing to graduate with honors.

Legal Officer

She was a barrister and solicitor at an Adelaide firm for three years and then spent three years as a legal officer at the Liquor, Hospitality and Miscellaneous Workers Union in South Australia before being selected as a Labor candidate for the Senate.

Wong served as the party’s spokeswoman during Labor’s 2007 election campaign and became Australia’s first ethnic Asian cabinet minister when then-Prime Minister Kevin Rudd appointed her to the climate-change portfolio after he led the party into government.

As climate-change minister, she drafted legislation proposing that Australia, the world’s biggest coal exporter and driest inhabited continent, reduce greenhouse-gas emissions in the next decade by between 5 percent and 15 percent from 2000 levels. The Senate defeated the bill in December after a revolt in the opposition Liberal party led to a leadership change, and it turned against the plan.

Shrug Off Failure

While the defeat helped to bring down Rudd, Wong was able to shrug off the failure and continue her political ascent, partly because of the perception that Rudd’s poor judgment contributed to the bill’s collapse, said Haydon Manning, an associate professor in the Department of Politics and Public Policy at Flinders University in Adelaide.

“I’ve always thought she’s been harshly judged, given it was a very complex piece of legislation,” Manning said in an interview. “Rudd should have helped her sell it; instead, he left her to face the pressure.”

Wong’s promotion to finance minister in Gillard’s government now places her among the country’s top officials. The post is akin to the head of the White House Office of Management and Budget in the U.S., with Treasurer Wayne Swan occupying the equivalent of Treasury secretary.

Her ascendance is a rarity: Australia has a dearth of Asian-born representatives, even as the group’s share of the population climbed to 8.5 percent of country’s 22 million people in 2009 from 5.3 percent in 1999, according to Australian Bureau of Statistics data.

Public Servant

A member of the Uniting Church, Wong is also Australia’s first openly lesbian Cabinet member. She lives in Adelaide with her partner of three years, Sophie Allouache, a public servant who, like Wong, went to Scotch College. Allouache attended both of Wong’s swearing-in ceremonies.

Wong will have to display “a reckless degree of toughness” in her new role, Nick Minchin, finance minister from 2001 to 2007 in Howard’s government, said in a Sept. 29 interview.

As finance minister, “you have to be able to stand up to your colleagues and say no and be able to make the case,” said Minchin, who oversaw the sale of the final 35 percent stake in Melbourne-based Telstra Corp., Australia’s largest telephone company and is also from South Australia. “In a minority government like this, there are going to be enormous demands for what can only be described as pork barreling: inappropriate and irresponsible spending.”

‘Real Risks’

There are “real risks and she has a tough job ahead of her,” he added.

Wong replaced former Finance Minister Lindsay Tanner, who quit politics to work at Lazard Ltd., an investment bank. Tanner was credited with helping lead Australia’s response to the credit crisis, pressing to get stimulus into the economy quickly.

“Tanner was very well respected in the market,” said Stephen Halmarick, who helps manage about $135 billion as head of investment markets research at Colonial First State Global Asset Management in Sydney. While Wong’s appointment came as a surprise to some investors, “she is obviously someone who is very smart and can master her brief and will bring a new dimension to the role.”

To contact the reporters for this story: Michael Heath in Sydney at mheath1@bloomberg.net; Gemma Daley in Canberra at gdaley@bloomberg.net

To contact the editor responsible for this story: Chris Anstey in Tokyo at canstey@bloomberg.net

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