Jim Chalmers a hostage to inflation as he tries to keep voters on side

Federal Treasurer Jim Chalmers in his office at Parliament House in Canberra on Monday. Picture: NCA NewsWire / Martin Ollman

Jim Chalmers spends a lot of time telling us what he thinks about the economy. And there’s nothing necessarily wrong with that.

But the perception of an ­absence of action is what is killing the Albanese government politically.

With the mid-year budget update looming, the Treasurer needs a new economic narrative.

There two simple reasons for this. The government’s pitch is failing while Chalmers remains largely hostage to the driving ­forces of discontent – inflation and interest rates.

As such, Chalmers hasn’t much in the armoury to alleviate the pain families are feeling.

This isn’t the only problem. The government needs to do a better job selling its story.

The Treasurer intends to use the focus on the budget outlook this week to begin reframing the rhetorical strength of the government’s forward agenda.

Chalmers is clearly sensitive to the criticism that he lacks the zeal for reform. He would argue that there is plenty going on. In energy, human capital, capital flows and markets.

If Keating’s plan was to open up the Australian economy, Chalmers sees his role as modernising it.

Hence, “modernisation” and “maximisation” will become the new buzzwords the Treasurer ­intends to use to take the nation with him.

There is a third M, Middle Australia, which Chalmers understands will be the pivotal one.

Some may recall modernisation as a borrowed term from Tony Blair’s “third way” campaign and a key feature of UK ­Labour’s response to post- Thatcher economics.

Coalition colleagues of Josh Frydenberg wince at how he got himself into all sorts of strife by invoking Reagan and Thatcher in 2020.

Nevertheless, the point is that Chalmers knows the government needs to sharpen its tools if it is going to convince Middle Australia that its future economic agenda is going to help rather than hinder.

Writing in The Australian ahead of Wednesday’s MYEFO, Chalmers talks up a new reform agenda constructed around the three Ms. While he says the job so far has been to restore the budget position from the one Labor inherited, using the May budget to protect the most vulnerable from inflation, the next phase would be to outline a future agenda based on renewal and reform.

Chalmers clearly accepts that over summer, he will we need to articulate an agenda beyond cost of living and inflation.

But he can’t miss a key step. The bit in the middle – the inflation phase that has made voters so grumpy. Without addressing this, the electorate will remain deaf to anything else.

This forward agenda is so far only rhetorical in nature. And from what Chalmers is saying, the key themes remain largely ­unchanged.

The modernisation he talks about is the reforms of key economic institutions – such as the RBA and the Productivity Commission. The maximisation ­relates to the energy investments, manufacturing base and leveraging the resources sector.

The government is clearly clinging to hope that this will resolve itself in time for the transformation story to take seed in the imaginations of the electorate.