Jim Chalmers’ budget is more than a flesh wound - it’s designed to hurt

There’s a touch of Monty Python’s Black Knight declaring it’s “just a flesh wound” in the face of the economic blood and gore.

There’s a touch of Monty Python’s Black Knight declaring it’s “just a flesh wound” in the face of the economic blood and gore of Treasurer Jim Chalmers’ first budget.

Not because he is trying to underplay the global risks and threats that Australia is facing.

He’s not doing that.

It’s more about the magnitude of the s***show outlined in the budget papers and the limited options for triaging the blood loss.

There’s war, floods, soaring inflation, lower growth, rising interest rates and predictions households will be hit by a 56 per cent surge in energy bills in the next two years.

But wait, there’s more.

Just as the Black Knight staggers around in the Monty Python sketch with detached limbs and arteries erupting in spray patterns, we learn that the hits keep coming.

Like this.

The Black Knight in Monty Python and the Holy Grail

Don’t expect any immediate cash assistance to pay for these rising costs because Mr Chalmers believes - correctly - that cash assistance would simply add to rampant inflation.

“Australians know there are hard days to come and hard decisions to accompany them,’’ he pronounced in his first budget speech.

Indeed.

Instead, there’s cheaper childcare for working families and more generous parental leave to address the inevitable squeeze when parents buy a house, have kids and drop down to one income, sometimes in quick succession.

Basically the election promises we heard about earlier this year.

But while cheaper childcare is nice, it doesn’t deliver a great deal for parents whose children are of school age or teenagers.

It will of course make after-school care cheaper for eligible parents with kids in primary school.

But it’s something that delivers relief to a certain group of families and parents rather than across the board.

Treasurer Jim Chalmers delivers the 2022-23 Federal Budget in the House of Representaives

The bad news? Inflation.

The budget papers predict inflation will hit 7.75% in the final three months of this year.

It is expected to remain at high levels well into 2023, which would likely delay increases to real wages until 2024.

To a large extent, the likely tax increases that will be required in the future to grapple with budget repair have been put in the too hard basket for now.

After flirting, dangerously, with the prospect of dumping an election promise to deliver the Stage 3 tax cuts, the Albanese Government has retreated.

The Treasurer did so by pointedly making clear that the cost of the tax cuts has blown out to $254bn over 10 years.

So, we know something about where his sympathies lie. Remember, he described the tax cuts for the rich as “offensive” during the 2019 shadow cabinet discussions over which way the ALP should jump.

Back in June 2019, he told colleagues behind close doors that it would be “offensive” for Labor to support a flat tax rate of 30 per cent for workers earning six figures.

He was backed by the former Treasury spokesman Chris Bowen in the shadow cabinet discussions.

Treasurer Jim Chalmers with his daughter Annabel after he delivered the budget. Picture: NCA NewsWire / Gary Ramage

Of course, he doesn’t want to dump the tax cuts in their entirety now, but he seems relatively open to giving them a trim for high income earners, for example those earning over $180,000.

During his interview with the ABC’s 7.30 on Tuesday night, the Treasurer was careful to dodge the question that he might tinker with it in the future.

As host Sarah Ferguson threw phrases at him including, “So, they stay in place, no question” and “So, that’s absolutely - no tinkering with that?,” the Treasurer responded to different questions.

“We’ve said it’s important that people get some tax relief when the budget can afford it,’’ he replied.

That doesn’t sound like a promise. And he wasn’t really chased down on it.

Meanwhile, the Treasurer has warmed to an old favourite of Scott Morrison.

Telling voters how they feel.

“Australians know that the complex combination of challenges at home and abroad is pushing up the cost of living,’’ the Treasurer said in his speech.

“They know that governments cannot make inflation disappear overnight.

“And they don’t need us taking steps that would just make the problem worse by putting even more pressure on prices and making the independent Reserve Bank job even harder.”

In other words, don’t expect any relief. Learn to live with it.

The pain is the medicine. And it’s designed to hurt.

Originally published as Jim Chalmers’ budget is more than a flesh wound - it’s designed to hurt