Budget 2022: Fudges and fumbles no longer fly

Jim Chalmers was on a mission to explain why he could not provide more relief for the cost-of-living crisis over and above the delivery of key election commitments.

Treasurer Jim Chalmers takes centre stage during question time on Wednesday. Picture: AAP

It was already a difficult budget to sell.

Restricted by the highest inflation in 30 years, Jim Chalmers was on a mission to explain why he could not provide more relief for the cost-of-living crisis over and above the delivery of key election commitments.

Despite forecast energy price hikes of 56 per cent and a two-year free-fall in real wages, the message was about responsibility instead of recklessness.

Australians were being told to brace for “hard days to come.”

Did this mean Labor had abandoned its policy to reduce power prices by $275?

It was a straightforward question put directly to the Treasurer at his post-budget address. It required only a one-word response.

The government had been fudging its position on this point for months. Would this be its ­moment of truth?

Dr Chalmers finally appeared to provide a clear answer – the commitment would be honoured.

“Yes. It’s in the budget,” he declared. That clarity lasted less than an hour.

Speaking in parliament a short-time later, opposition Treasury spokesman Angus Taylor asked the obvious question at the despatch box while flipping through the budget papers: “What page refers to a reduction of $275?”

It was then that Dr Chalmers confessed. “I misheard it and I answered a different question,” he explained.

Was it a significant moment in the overall scheme of things? No.

It was a passing embarrassment for the new Treasurer, although the negative political optics mired the budget sales job on a position of vulnerability for Labor: whether it could keep its election promise on energy?

Mugged by reality, the government’s promises to reduce power bills and boost real wages were ­exposed in Tuesday’s budget.

The gaffe simply made more obvious what was already in plain view.

The slip-up was not the most serious problem of the day though. New figures showed inflation over the year to September had ­increased to 7.3 per cent – closer than expected to the peak of 7.75 per cent forecast in the budget for December.

While most experts still expect the Reserve Bank of Australia to increase the official rate by 25 basis points on Melbourne Cup day next Tuesday, the chances of a 50-basis-point hike were buoyed by the result.

A 50-basis-point hike would take the official rate to 3.1 per cent and pile even more pressure on homeowners struggling to repay mortgages.

Dr Chalmers has appealed for understanding from the public.

Had the government poured cash into cost-of-living measures in Tuesday’s budget, it would have forced the central bank to work even harder to curb inflationary pressures.

“There is a pretty solid understanding in our communities of how this works – the balancing act, the tightrope that we’re trying to walk here,” Dr Chalmers said on Wednesday.

He may be right on this point, but the public will not be as accepting when it comes to broken election promises.

The government will need to own its mistake in promising the $275 reduction in power bills.

Fudging its answers from here is likely only to extend the political pain.