Both Albanese and Dutton believe they’re on the right track. But one of them must be wrong

Last week, several huge retailers saw their share prices plummet. Super Retail, Baby Bunting and JB Hi-Fi all fell. Others saw small but still significant drops. Perhaps the figures released by those companies shouldn’t have been a shock, given the awful retail stats released the week before.

Ben Dorber, head of retail figures at the Australian Bureau of Statistics, noted that “outside of the pandemic period and introduction of the GST, this is the weakest growth on record when comparing turnover to the same time in the previous year”.

It can feel as though the cost-of-living crisis has been with us a long time. Perhaps you’d expect us to be used to it. Instead, figures like these suggest that the way we feel about it – our actual experience of those high prices, measured by its impact on our behaviour – may be well and truly grinding us down.

Illustration: Joe BenkeCredit:

Last week, Treasurer Jim Chalmers used striking language to suggest his awareness of this fact. “It is inflation which is punishing people,” he said.

In the lead-up to tomorrow’s budget, there has been much discussion of the conflicting forces facing Chalmers. On one hand, there are some signs of inflation being even stickier than it had seemed, both in the United States and here. The Reserve Bank governor, Michele Bullock, last week revealed the RBA board had discussed another rate rise, before leaving rates where they were. On the other hand, there’s that growing sense of economic slowdown. Chalmers really, really can’t afford to stimulate the economy, but he can’t afford to slow it down much either.

That is, as widely noted, a difficult economic balancing act. But because budgets are political events as much as economic ones, one of the most important aspects of the environment into which this budget will arrive is that bitter national mood, which may still be deteriorating. Last year, people were still a little shocked by high prices. At this point, they may simply be fed up. And this with winter coming on.

For budget week, this means both Labor and the Coalition are likely to be risk-averse. Also bear in mind that – looking at precisely the same set of polling numbers – both Anthony Albanese and Peter Dutton can tell themselves their strategies are working. Albanese can tell himself that, despite a long-lasting inflation crisis, he is still (on average) ahead in the polls. At the same time, Dutton can tell himself that, sure, he’s behind, but Labor’s numbers have been falling for over a year.

If Dutton continues as he’s begun, this will mean that on Thursday, when he delivers his budget-in-reply, he will do whatever allows him to focus on attacking Labor. There may be policies, but their aim will be less to excite voters than to encourage criticism of the government.

Opposition Leader Peter Dutton walks past Prime Minister Anthony Albanese. One of them is about to discover that their opponent’s reading of the polls was right all along.Credit: Alex Ellinghausen

But given the budget is tomorrow, let’s stay with the government. Labor, should it continue on its way, will remain slow-and-steady, focused on not spooking the horses. And in any number of areas, you can see why. Take economic reform. The government argues it’s done a heap. The more common (and accurate) view is that it has done a bit, but that this is more in the way of preparing for big reforms down the track: starting conversations, conditioning both voters and the political class for more change after a decade or more in which little has changed. And, to be fair, with voters worried about money, this does not feel like a conducive environment in which to start national conversations about change. In fact, we know it’s not. Voice referendum, anyone?

Similarly, you can understand, at a purely political level, why the government might suddenly be announcing policies in favour of gas, or indicating it is unlikely to raise JobSeeker. Its number one aim right now is not to antagonise ordinary voters.

The difficulty in politics is that at some point – and you never know when – the risk calculus flips. Being risk-averse becomes a risk in itself. And the difficulty for both Albanese and Dutton is that both of them can’t be right; one of them is going to discover that their opponent’s reading of the polls was right all along.

For Labor, the problem with all this caution is that it creates another, very significant risk: that nobody really understands what it is trying to do.

You simply cannot claim you are serious about stopping climate change while talking about opening up new gas fields and continuing to export massive amounts of the stuff to the world. Or, rather, you can, but you should expect people to be confused.

Last week, the Sex Discrimination Commissioner Anna Cody said that raising JobSeeker would “stop homicides”, allowing women to permanently leave violent relationships. Similarly, you cannot, as a government, hear those words, refuse to raise JobSeeker, and claim you are serious about stopping men from killing women. Or, again, you can: but people will doubt you.

And at some point, if you want people to understand that you are fundamentally changing the economy (which is what significant reform means) then you need to do that.

Of course, we don’t know what is in the budget. Perhaps the government will act in all these areas. And the Future Made in Australia policy we keep hearing about may yet turn out to be significant reform. It will be interesting, tomorrow, to see the balance the government strikes between grants (too often a euphemism for pork-barrelling) and changes to the tax system.

The Albanese government is operating in particularly tricky circumstances. With hindsight, its first year in power was relatively straightforward. But while the current situation may tilt towards the more difficult, it is probably closer to the usual experience of government than that first year. In government, difficulty of some sort is a constant. You can wait for this particular “difficult” phase to end, but usually another arrives soon enough.

Sean Kelly is author of The Game: A Portrait of Scott Morrison, a regular columnist and a former adviser to Julia Gillard and Kevin Rudd.

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