Chalmers’ budget wishlist easier said than achieved

A week from the budget, opposition Treasury spokesman Jim Chalmers will set out on Tuesday the criteria on which he will judge it. The tests he lists also would be defining features of an Albanese government’s first budget later this year, Dr Chalmers will tell the Australian Chamber of Commerce and Industry in Sydney. The tests are laudable objectives. But his speech provides no details about how much they would cost or how Labor would set about achieving them. Dr Chalmers wants at least three debates with Josh Frydenberg between the budget and the election. Such debates would be pointless, however, while the opposition’s budget and economic policies remain a mystery.

Dr Chalmers’ five budget tests are: whether it rebuilds communities affected by flood and fire fast enough; whether it eases cost-of-living pressures enough, and responsibly enough; whether it ends the rorts and waste, and sets out a clearer path to budget repair; whether it supports recovery and makes supply chains, businesses, vulnerable communities, public health and family budgets more secure and resilient, and; whether it lifts the speed limit on the economy – boosting productivity to get growth without adding to inflation.

He has a good point when he says rising interest rates will punch holes not only in family budgets but also in the national budget. “In 2024-25 we could be paying $4.7bn more in interest, taking our interest bill to much more than we spend on family tax benefits, the Pharmaceutical Benefits Scheme and more than double what the commonwealth spends on government schools or childcare support,” he said. Rising interest rates are a good reason for budget repair. They are also a good reason for Dr Chalmers to quantify the cost of Labor’s new spending priorities to encourage growth, free TAFE, more university places, a better NBN and cheaper childcare.

Also on Tuesday, Energy Minister Angus Taylor will unveil budget spending to boost growth and to accelerate development of six new gas fields – a worthwhile investment to prevent Australia suffering the kind of energy crisis facing Europe. The government will spend $50m to hasten gas infrastructure projects to increase storage and deliver more supply to the southern states. The projects include APA Group’s Southwest Pipeline Expansion project to transport gas from Queensland to Victoria; the company’s proposed greenfield processing facility in Queensland’s Surat Basin; Lochard Energy’s Heytesbury Underground Gas Storage Project in Victoria; and a feasibility study into the best way to deliver gas from the Beetaloo Basin in the Northern Territory to east coast markets.

Budget repair is an issue both major parties must face over time. But correcting the deficit too hard, too early would have a detrimental impact on the economy, ratings agency Standard & Poor’s has warned. Pursuing a rapid return to federal budget surpluses would have “long-term consequences for the economy” that could threaten the nation’s coveted AAA rating, S&P Global Ratings lead country analyst Anthony Walker told The Australian.

The budget will show an improved bottom line for the best reasons – booming resources prices, higher GST, company and personal tax receipts, and lower welfare outlays due to unemployment falling to a 48-year low. The fiscal dividends of growth are strengthening the nation’s balance sheet. The pejorative terms applied to the government’s economic record by Dr Chalmers – mediocrity pre-pandemic, calamity during it and uncertainty now – lack credibility while he refuses to present alternatives. But it is hard, surely, for a Labor treasurer to argue against a turnaround that has produced a 4 per cent jobless rate.