Budget 2024: Peter Dutton must put meat on the policy bones as voters chew over Labor handouts

Treasurer Jim Chalmers at the National Press Cub in Canberra on Wednesday. Picture: NCA NewsWire / Martin Ollman

Jim Chalmers’ budget has gone down like a lead balloon with economists and among the chattering class, but it remains to be seen how it lands with the rest of Australia.

Forget the freakonomics, this is where the true measure of political success resides.

The Treasurer is banking on a time-honoured political formula of human behaviour that no one will reject a handout. Just how grateful people will be is another question, considering where the needle is currently pointing on the misery scale.

Chalmers may have thrown the inflation handbook out the driver’s window into the path of an oncoming truck, but this may not matter in the short term, if an early election is the destination.

The key supposition is that families in suburban Australia are paying little attention to the high-level debate over profligacy, deficits and the dubious forecasts for inflation. Instead, they are fixated on what is coming in and going out of their own budgets on a weekly basis. This is Chalmers’ hope at least. And from July 1, these families will be seeing more come in. But this is all relative. For many it is likely to be less than the increases in what is still going out.

None of it solves the underlying problem. Cost-of-living pressures remain. And if economists are right, it could all get worse.

As for mortgage holders – 30 per cent of households – they may well be sitting back in horror at the prospect of endlessly high interest rates, or even an increase, as a result of the budget.

Despite his protestations, Chalmers’ third budget is a deeply political document. He has brought forward the sugar hits and delayed the difficult decisions. The $300 energy handout also smacks of a last-minute inclusion. Chalmers alluded to as much in his post-budget retorts to criticism of its universalism. “We weren’t prepared to put the time and effort and money into designing a whole new system of means testing when this bill relief is delivered via the energy retailers,” he admitted.

Clearly the reason Treasury chose this path is because, in order to get the CPI down, the rebate had to be put through energy bills – which can’t be means tested. Had it been done through the welfare system, it wouldn’t have had the desired effect in headline inflation.

The RBA will see through all of this. Other factors support an early poll theory. The figures in the budget are rubbery. One could also assume that where the economy is headed may be worse than the official forecasts.

Why would Chalmers want to deliver his final budget as recording a deficit?

Finally, any trust that remains over Labor’s economic credentials would be shattered if Chalmers fails to meet the benchmark on inflation reduction he has now set himself.

One has to wonder whether private polling by Labor has informed the budget and forced the recalibration in the narrative, as it may also have done with Anthony Albanese’s decision to throw his Energy Minister, Chris Bowen, under the bus over gas.

The trend in Labor’s primary vote in the published polls has been consistently dropping. This needs to be arrested for Labor to avoid being forced into minority government at the next election.

The big picture question for Peter Dutton in his budget-in-reply speech on Thursday night is whether he takes Labor on over the question of returning the budget to some sustainable path or reject Albanese’s cost-of-living measures. Whatever Dutton does on Thursday night, he will have to start rolling out at least two or three key policies that speak to where the Coalition intends to steer the election fight.

Most likely this will involve migration and housing – two key cost-of-living concerns.