Chalmers starts dead wrong and irresponsible

Incoming Labor Treasurer Jim Chalmers’ claim that inflation is ‘almost out of control’ is the equivalent of screaming ‘fire’ in a crowded cinema.

Australia's new treasurer Jim Chalmers (L) shakes hands with Governor General David Hurley after taking his oath during a ceremony at Government House in Canberra on May 23, 2022. (Photo by SAEED KHAN / AFP)

Disturbingly, incoming Labor treasurer Jim Chalmers has confirmed upfront that he’s not just utterly unfit for the job – worse, he clearly hasn’t a clue that he’s actually proudly announced that.

His statement that “inflation was almost out of control” was not only utterly wrong, it was highly irresponsible – coming from the incoming treasurer, the equivalent of screaming ‘fire’ in a crowded cinema.

Yes, inflation has risen and risen quite sharply and suddenly. Over the six months to September last year, it was running at an annualised rate of just over 3 per cent. In the six months to March that leapt to an annualised rate close to 7 per cent. This was not, though, unpredictable. Indeed, this is what I wrote in early October last year. “Inflation is coming, ready or not. Indeed, it’s already here if somewhat muted for the moment by the lockdowns in NSW and Victoria.”

True, it was utterly unpredictable to the ‘experts’ at both Treasury and the Reserve Bank.

A month after I wrote that, the RBA forecast inflation over the year to this current June quarter would be an unthreatening, docile and even desirable 2.75 per cent.

Treasury had the same forecast in the mid-year budget update, in December just before Christmas.

The actual figure is going to be around double that; around 5.5 per cent, and perhaps even 6 per cent or a tad higher. The reasons have been hiding in plain sight.

The way the Victorian and NSW economies came roaring out of their lockdowns, super-charged by all the stimulus spending and the zero interest rates.

This ran smack into the labour shortages, thanks to the zero immigration over the two years of Covid, and which has given us that 50-year record low jobless rate - plus all the other shortages, thanks to those two years of Covid and China’s more recent Covid-zero lockdown policy, all disrupting supply chains. Inflation is not, though, “out of control”, or even “almost”.

Federal Treasuer Jim Chalmers at his post election party on Saturday night. Picture Mark Cranitch.

To claim that, was a dreadful combination of ineptitude and crass politicking.

Someone needs to tell Chalmers the election is over. He’s now the treasurer; his responsibility is to best manage the economy in the best interests of all Australians, not try to score cheap and, frankly, pointless points.

The inflation is not out of control, but the one thing that could very quickly cause exactly that to develop, is a wages explosion chasing the higher inflation we are seeing right now.

That’s why Chalmers’ further blundering, like an over-excited high school student at a climate change cry-fest, made it so much more disturbing.

He almost invited exactly the wages explosion that would trigger a wages-prices spiral that would be devastating, not just for the economy in the broad but the great mass of individual Australians.

For he immediately went on, in the same sentence, to link to the “almost out of control” inflation, “real wages are the worst they’ve been for 22 years”.

Right, treasurer, is that a green light, for unions and workers to ‘go for it’?

Are you next going to announce an Albanese-led Labor government would seek to replay the Whitlam Labor government of the 1970s?

To have big pay rises in the public sector acting as the “pace-setter” for wages across the economy?

Scary enough? It gets scarier.

We already know that the new prime minister doesn’t have a clue about how the economy works and indeed what is actually happening in the economy.

He announced that on day one of the campaign. The best you can say about PM Albo is that he’s Whitlam Lite, very lite.

And read my lips, or my columns, about the Treasury secretary: in a three-letter word, he’s a dud.

As I wrote Monday, fasten that harness.