Jimbo: the man with all the excuses

Treasurer Jim Chalmers during his pre-budget address in Brisbane. Picture: NewsWire/Tertius Pickard

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During his time as Treasurer, Jim Chalmers has perfected the art of protecting his backside – I could use another term but we are a quality newspaper.

He has excuses for everything that has gone awry while attributing any good news to his “responsible economic management”.

As next week’s budget approaches – and let’s face it, Anthony Albanese and other senior ministers would have preferred to give it a miss – Chalmers is putting a lot of effort into managing expectations. It’s what expensive PR executives would recommend.

What we are expected to believe is that any bad news in the budget will be because of external factors beyond the government’s control.

Mind you, Chalmers’s mentioning ex-Cyclone Alfred was worth a laugh. Not only will the budgetary impact of this very recent event be minimal, but there is also a contingency item in the government accounts for this very purpose.

Chalmers’s reasons for mentioning Alfred were that it was recent; it seemed like a big event; and the punters out there will remember it. Yet from the point of view of the budget to be handed down next Tuesday, it is close to irrelevant.

Of course, it is not unreasonable to “model” – more like guess – the impact of the current and proposed round of tariffs coming from the Trump administration. At this stage, it looks like three-fifths of very little, although the indirect impact via China could in time amount to something more substantial.

Here’s the real rub: the rivers of future deficits that the budget will reveal are overwhelmingly the consequence of decisions made by this government and the complete failure to deal with our abysmal productivity record.

You only need look at the most recent MYEFO delivered last December to see what is going on. This government is addicted to more and more spending.

When Labor came to office in 2022, government payments were $627bn. This financial year, they will come in around $730bn.

That’s over $100bn more.

Next financial year, government spending as a proportion of GDP is expected to be 27.2 per cent, a figure not reached during the global financial crisis. (It was higher during Covid.)

Chalmers is now foreshadowing a slight improvement in the budget outcome for this financial year as well as to the underlying cash balances (read deficits) for the next four years. Full employment coupled with gushing bracket creep is ensuring an almost embarrassing flow of income tax receipts.

And even though commodity prices have softened somewhat, they are all above the levels assumed by the Treasury to produce its revenue forecasts.

For instance, Treasury assumes an iron ore price of $US60/tonne whereas the current price is still above $US100/tonne

While luck has been on the Treasurer’s side, the money has burned a hole in his pocket … and more. We should expect to see a continuation of the non-means-tested energy rebates announced in the budget, given that it’s clear that electricity prices are on the rise and not falling as we were assured would be the case during the last election campaign.

Having flown out of the blocks with some big announcements in the first two months of the year – the excruciatingly inefficient promotion of GP bulk-billing (sadly matched by the Coalition) and the upgrade of the Bruce Highway spring to mind – the government may have to take a rather modest approach to any further expensive election promises.

Even at the current rate, gross federal government debt will be approaching $1.2 trillion by 2028-29 or close to 40 per cent of GDP. And states’ debts are on top of this.

We like to pat ourselves on the back for our relatively low level of government debt compared with many other advanced economies. We may not be able to sustain our bragging for much longer.