More than a decade later, in 2006, I interviewed Fraser in his plush office high above Lombard Street in the heart of London's financial district. He had been in London for six years, moving there from Sydney where he had joined the Swiss Bank Corporation, later to become UBS, after leaving Treasury. It was before the global financial crisis and the City of London was pulsating with the excesses of the boom.

At the time it seemed incongruous: Fraser, a former salaried Canberra bureaucrat, a man who dwelt in the shadows behind Paul Keating in his political prime, was sitting on top of the City. As chief executive of UBS Global Asset Management, he was wheeling and dealing, earning a head-spinning amount of money at the height of investment banking's bonus boom. Yet what appeared incongruous was anything but.

Fraser had made the transition from public policy adviser to investment banker with extraordinary success. UBS Global Asset Management had gone from earning an annual profit of about $US200 million in 2001 to a net profit before tax of $US1.7 billion in 2007.

Between 2007 and his departure from UBS at the end of last year, Fraser was the only senior executive to remain with the company, heading the only part of the business that had kept making profits right through the GFC.

Fraser with Finance Minister Mathias Cormann. Alex Ellinghausen

"My long-term plan was to live my life between England and Australia. It was working really nicely," Fraser reflects now. "I was given terrific freedom at UBS. There wasn't a day when I didn't have freedom. You have to run your own life. That's the important thing."

I'm interviewing Fraser again, this time in his Canberra office in late July. It's a different setting but the same sense of incongruity. Fraser was one of former Prime Minister Tony Abbott's "captain's picks", chosen to replace Martin Parkinson, whom Abbott sacked as Treasury secretary a year or so after coming to power. Fraser faces a big adjustment as a result of the change of Liberal Party leadership - working to a new Treasurer who will be working under a new Prime Minister.

It's an unprecedented appointment, the first outsider from the private sector to take on Canberra's most important public policy advising job. Fraser took up the position just weeks before the February Liberal Party leadership spill, a political shock that changed the course of the government and in effect killed its economic reform agenda – a big setback for a new economic policy chief. But with Malcolm Turnbull expected to intensify the government's focus on economic reform and with Fraser a strong advocate of reform, the change may, in fact, strengthen his position.


When Fraser was first sounded out about returning to Australia, he wasn't interested. But then Abbott called him and said something that, unbeknown to the Prime Minister, resonated with the banker. Abbott urged Fraser to think about it in terms of giving something back to Australia, after all his success in both the public and private sectors.

Former Treasurer Joe Hockey with Fraser outside the Treasury building earlier this year. Andrew Meares

"I know 'serving the Australian people' sounds hackneyed," Fraser says. "But it did strike a chord."

It was a notion he was already acting on in another arena. While living in London, Fraser had become involved in a British organisation called Help for Heroes, which provides financial and material assistance to British soldiers wounded in Iraq and Afghanistan. He got involved after talking to a mate back in Canberra who served in the British and Australian armies, whom he regards as a real war hero.

Fraser initially just wanted to make a significant donation, but ended up volunteering, spending time with the veterans, including taking some to events such as the Formula One British Grand Prix, which UBS sponsored, and helping arrange fundraising dinners.

"It changed my life," Fraser says. "We would get hedge fund managers along to dinner and I would get up and say, 'All right, you have had your evening's entertainment. You know what you have to do, boys.' A lot of them were clients." Into their third bottle of red wine, the hedge fund managers would sit down and write "1 million-buck cheques".

"It was out of guilt about my life and my good luck. When you sit down with these [war heroes], some with faces half gone, with legs and arms missing and yet still a massive sense of humour, it seriously made me realise that some of us have been incredibly lucky in our lives."

'Something to assuage my conscience'


Fraser also developed another non-work interest in London, part of what he calls "trying to do something to assuage my conscience". He served on the board of the Marymount International School for girls at Kingston Upon Thames, a role he took up after the nun who chaired the board heard him give a lecture on ethics in financial management.

"The school needed some financial expertise as they tried to protect their not inconsiderable assets from the Vatican," Fraser says. "The concern was that the Vatican needed assets to pay off damages arising from their problems with the priests. I was the only non-Catholic and the only male on the board. It was a terrific learning experience."

On January 15, Fraser took his place behind the Treasury secretary's desk in Canberra, a few doors away from the office he left two decades earlier. That he'd been away a long time was immediately apparent; some of his staff are the offspring of his 1980s contemporaries.

There are other changes. Fraser says economic policy is much more complex than it was in the 1980s and early 1990s. The financial sector is far more sophisticated and there are many more lobby groups, which are much more accomplished in the way they present their cases. The state Treasury departments are headed by highly skilled and well-informed people. The number and quality of think tanks has risen dramatically. Government ministers are better informed.

"I don't think power has shifted away from Canberra but it is more complex," he says. "We [Treasury] need to engage more. I think we could be better positioned to provide advice if we do that." To that end, Fraser has established a Treasury office in Sydney and is setting one up in Melbourne, designed to help the department better understand what's going on and being said outside the national capital.

Those looking in from the outside are still trying to get a fix on the new Treasury secretary – most particularly, a sense of how he will perform in the role after so long away from back-room, public policy advice. Less than a year in, it's too soon to make much of an assessment, which is the reason Fraser does not appear on The Australian Financial Review Magazine's 2015 overt or covert power lists.

Fraser has acknowledged that the political environment is not the best for encouraging the government to adopt a robust economic policy agenda. He publicly differed with former PM Abbott and former Treasurer Joe Hockey over Sydney housing prices, calling the market a bubble. Abbott and Hockey insisted it wasn't. Senior ministers say Fraser has been much more blunt behind the scenes; one says he made it clear he thought this year's budget should have gone harder on reducing the deficit.

"John says what he thinks," says one minister who will only speak off the record. "No one is ever going to be in any doubt about his views."


Insiders say the risk for Fraser is that after Fraser's years of wielding great power at UBS, he will feel weighed down by the Canberra political process. "Fraser might end up being very frustrated," one cabinet minister says.

'You won't see me for the dust'

Fraser is candid – blunt, in fact – about his position. "I have had a great life. I can tell you, it is nice not having to worry about money. One of the great beauties of doing this job is that I don't need it. I didn't seek it and, unlike a lot of my colleagues, if I didn't want to do it any more there is no problem. I am very free. The only way I can live through this job is if it doesn't work out, you won't see me for the dust."

Fraser was raised in the Melbourne suburb of Armadale, "a working-class suburb in those days". He was one of four children, the only son of parents George and Solveig. "The greatest good fortune of my life was to have wonderful parents," he says in reflection. "My father was totally unlike me. He was just a lovely, soft-hearted guy."

His father was a bookkeeper in a family business and advised his son not to follow the same path. "He said to me: 'Son, don't work for a family company unless you are the family.'" It was Fraser's father who set him on the path towards economics.

"I wanted to be a lawyer, initially. Dad said: 'We are not Jewish so you are not going to be a lawyer.' He wanted me to be an economist, but he said: 'We are not Catholic, so you are not going to join the Victorian Treasury. Get a job in the federal Treasury, then you will have a job for life.'"

Fraser was studying economics at Monash University when his father intervened. "In 1970, I was lying on my bed on a Saturday morning, waiting to play rugby in the afternoon – I was too slow to play AFL. I was 18. Dad came in and said, 'The Treasury want to interview you on Thursday.' I said 'What?' and he said 'Don't worry about it. They will actually pay you to go to university.'

"I found out later that Dad had written the application on my behalf. It was for a cadetship, under which the Treasury paid for your third and fourth year of uni and you were then indentured to the Treasury."


Fraser flew to Canberra for the interview, his first ever plane ride, and was interviewed by 10 Treasury officials. He got the scholarship and "went from being one of the poorest people at Monash [University] to doing quiet well – they were paying good money in those days".

He excelled at his economics studies and, after completing a four-year degree, joined the Treasury in Canberra in 1973 as a condition of the scholarship. He climbed a steeply curving path, becoming one of the youngest ever deputy secretaries. But after the success and riches that his economics degree has brought, Fraser is sceptical about economics as a profession.

'Economists should be humble'

"We know far less than what we think we know," he says. "And what we do know is far, far less than what we don't know. I think the global financial crisis and the aftermath are fundamental reasons why economists should be extremely humble. Extremely humble! No one picked it."

Fraser is a strong advocate for the big economic ideas that were at the centre of the Abbott government's pre-leadership crisis agenda: fiscal consolidation, lower taxes, smaller government, less regulation, labour market liberalisation and building Australia's small and medium-sized entrepreneurial business sector.

He has also actively supported tighter foreign investment rules, in part a consequence of first-hand observation as a Sydney property owner overwhelmed by approaches from Chinese property-buying intermediaries. (He has an apartment in the central business district.)

As for the magnitude of Australia's economic challenges – and the urgency of taking them on – Fraser is quite nuanced. He says that, while there's no immediate crisis, Australia has to work steadily at implementing reforms that lift productivity and deal with the challenges posed by an ageing population.

"We do have serious economic issues to confront. Our income per capita is falling. So it is a case of trying to address them earlier rather than later. We need to be aware that the world is moving on quickly."


A couple of things have struck him about Australia after being away for a long time. One is a shift away from a bipartisan recognition of what needs to be done to deal with the economic challenges ahead, a problem compounded by a sense of complacency resulting from a quarter of a century of continuous economic growth.

He has also been surprised that Australians are not more focused on what is happening in the rest of the world, especially in the Asia-Pacific region beyond the obvious significance of China. There appears to be too little recognition of the changes occurring in countries such as Indonesia, Malaysia, the Philippines and Taiwan. India is also on its way to becoming hugely important.

"I would have thought, with globalisation and internationalisation, the community would have been a little more up to date on that," he says.

His view that Australia has been too narrowly focused on China is being vindicated by the China-related economic slowdown. But Fraser says he remains optimistic about the future of the Chinese economy and does not share the doom and gloom scenarios found in some of the recent commentary.

'I am a prick'

That said, he's acutely aware of the risk of appearing to be a "smart arse" who returned from London to lecture Australia on how to do things. "I don't want to fall into that trap," he says. "But equally, it is my job to provide robust advice about the problems I see and how I believe they should be solved."

Fraser is treading cautiously and is self-deprecating about his role, yet associates say he's already been quite rigorous in stamping his authority on the Treasury. Colleagues say he is tough, focused and demanding. "He doesn't suffer fools," one official says. "He can be pretty brutal with what he says." Fraser concurs: "I am a prick. I really am."

He showed during his years at UBS that he gets what he wants. His record there indicates a strong sense of probity. UBS was taken to the brink of collapse by its exposure to subprime lending, which caused it to write down its business by more than $US50 billion and sack more than 11,000 staff. The company's chairman and chief executive also resigned.


Fraser tried to resign in 2008, handing his resignation to Ossie Grübel, "a grizzled old German" who had just been appointed to try to clean up the bank's subprime mess.

"I quit UBS because I'd just had enough. I gave a year's notice. I said, 'I am not going to tell anyone,' but I told the CEO that 'I am leaving because I am just disgusted, I am embarrassed,'" he says. "I got talked into staying."

Grübel promised that he would build a new UBS, one that performed to the highest standards and behaved with integrity and honesty. Fraser liked him and was disappointed when Grübel resigned in 2011, taking full responsibility for the bank's failure to act on internal warnings that two of the bank's staff had engaged in unauthorised trades which led to losses of more than $US2 billion. With Fraser still at the helm, UBS Asset Management continued to perform profitably.

Fraser says he learnt some big things from working in investment banking through the greatest financial crisis of modern times. "I learnt to be very, very cynical about people. You know, when you put a big bucket of money in front of people, it can do strange things. All the systems under the sun won't save you from a malevolent person or a foolish person.

"The best system of compliance and risk management is to get to know people and to look them in the eyes. You have got to be very careful about giving people your trust. That was a big change for me because I had generally tended to take people at face value. But equally, you have got to be sensible. Everybody is not a turkey. Everybody is not a crook."

One of the good things about returning to the Treasury is that you can trust people, he says. "There are no integrity issues here. There are no issues about professionalism."

His advice for people who think they are geniuses is this: "A lot of us owe our good fortune to a lot of luck. Luck is a fortune. I was very lucky to have great parents and to associate with some great people. There is nothing wrong with luck, as long as you recognise it is luck. Don't kid yourself it's necessarily because you're a genius."

He also applies this to the nation: "We do have great good fortune in Australia. Everybody is happy, and God bless us. I feel it here, in Canberra in particular, where everybody is deliriously happy and comfortable. But I do worry a little bit that we don't realise how fortunate we are and that good fortune will only continue for our grandchildren if we face up to a few issues."


How and when and in what way Australia does that is now in no small part up to John Fraser.

Read Geoff Kitney's AFR Magazine profile on John Fraser: Treasury head John Fraser warns Australia risks falling behind



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