Treasurer Jim Chalmers announces he likes bigger deficits

The $48bn improvement to the budget bottom line is a political headache of the first order for ‘worst treasurer in a century’ Jim Chalmers.

Earlier this month the “worst treasurer in a century” - Jim Chalmers – woke up to a nightmare.

His head of treasury, Steven Kennedy, told him the Godawful news that the budget bottom line had improved by a completely unprecedented $48bn for a single year and in only a few months.

That’s right, $48bn had dropped into the treasurer’s lap, out of a fiscal blue sky, and this was an absolute disaster. How on earth would he explain the terrible news to Australians.

Not surprisingly commentators as varied as the Fin Review’s Phil Cooray and our and Sky News’s Andrew Bolt were incredulous. He’s got nearly $50bn he didn’t expect and it’s a disaster?

Well, actually, it is: a political headache of the first order.

First off, the $48bn improvement was to the – last – budget of former treasurer Josh Frydenberg, for the year to the end of June. Nothing to do with Chalmers.

The second and in some ways bigger problem was what it would say, what expectations it would set up, about his – first – budget coming up at the end of October.

Some people might even begin to wonder if we were about to see a replay of the Rudd-Swan years.

Back in 2007 the dynamic duo not only inherited a budget in surplus but a balance sheet that had absolutely zero debt.

Australian Treasurer Jim Chalmers. (Picture: AAP Image/Lukas Coch)

They then preceded to give us oceans of fiscal red ink. Although true, they weren’t helped by being ambushed by the GFC.

But then again, so was Frydenberg. Just as he was about to get the budget back into the black for the first time since Peter Costello’s 2007 budget, he – and all the rest of us - were ambushed by Covid.

This second problem – as it’s about the future, and on to the next election – is the bigger one.

The Chalmers budget is going to have far too much politically uncomfortable red ink.

So Chalmers tried to push two lines, channelling the use of terminological inexactitudes, honed to a fine misleading art, by his idol Paul Keating.

First, that the improvement was all both just lucky - booming iron ore and coal prices; and the previous government’s ineptitude in not spending the money.

So that his, Chalmers’s, coming ballooning deficits wouldn’t really be his fault.

Good college try, I would have to say, Jim.

Just as you well and truly ‘own’ the coming surge in petrol prices when you don’t extend the excise cut - because you (and your colleagues) choose to preference other spending.

So you will ‘own’ the budget deficits that you will unveil at the end of October. They come from your decisions.

In passing, I would have thought a treasurer behaving as a treasurer not a grubby politician would have hailed the lower 2021-22 deficit, as the extra money came not from hitting Australians but straight out of, mostly, China.

It was mostly down to foreigners paying more for our exports: what’s not to like about that for an Australian treasurer?

The other big chunk came from the government not having to spend as much because we came roaring out of Covid much more strongly than budgeted.

Again, what’s not to like about that?

As for that opening description of Chalmers, it’s not mine but comes from the boys down at the macrobusiness website.

Earlier in the week I wrote how the boys had gone the full hysteria over property prices.

Do you think, do you really thunk, it’s just a tad bit hysterical and over-the-top to describe Chalmers as the worst treasurer in a century?

Really? He’s been treasurer for all of three months. He hasn’t actually done anything yet.

And he’s already the worst in a century?

Boys. You really need some medication.

Originally published as Treasurer Jim Chalmers announces he likes bigger deficits