Election 2025: Global agencies decry budget careering off the guardrails

Treasurer Jim Chalmers in Brisbane on Monday. Picture: NewsWire / Tertius Pickard

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Despite two separate, unambig­uous warnings now from global agencies during the election campaign, the Albanese government has chosen to ignore all advice and double down on its spending ­addiction.

Between the release of the Pre-election Fiscal Outlook and now, it has done nothing to address the calls to rebuild the budget’s fiscal buffers.

There is now no apparent commitment to get the structural budget problem under control.

In releasing its costings on Monday, Jim Chalmers conceded that Labor had added another $10bn to the tab over the course of the campaign so far.

Some of it was already accounted for in the budget. The rest – around $6bn – will be paid for by the magical discovery over the past couple of weeks that there were more savings to be made in government contracting that weren’t apparent before.

This is simply not believable.

One could rightly argue the Coalition hasn’t been much better but at least it appears to be having a crack by putting in some fiscal guardrails. Opposition Treasury spokesman Angus Taylor is promising to deliver a better budget position when the Coalition releases its own costings later this week.

The International Monetary Fund last week said the Australian Treasury had underestimated tariff war impacts and the economic outlook was a lot bleaker than the Albanese government would like us to believe.

On Monday, ratings agency S&P said Labor’s spending frenzy was now putting the AAA credit rating at risk.

Two fair warnings issued. Both appear to have been ignored.

The Treasurer claims a virtue of being upfront about Labor’s spending plans and how he proposes to pay for them.

The ratings agency seems to have a different view. S&P said the Albanese government had become increasingly sneaky not only about hiding its spending off-­budget but the sheer scale of it.

The use of off-budget mechanisms to fund mega-programs has become increasingly popular because they don’t show up as expenditure items in the course of the normal budget process. The interest on the debt incurred to pay for them does, of course.

But the Albanese government has taken this exercise to a whole new level. S&P says there is now around $100bn in government spending squirrelled away in off-budget spending. This is separate to the $178bn of budget deficits that are coming as well.

When Chalmers claims the budget is $1bn better off now than the April budget, this is the context.

He can argue the toss all he likes but there is no hiding the fact that government spending is reaching preposterous levels.

The S&P is a rare warning to the government and goes to the heart of what the Coalition has targeted in its plans to make savings in the budget.

Taylor’s $100bn in cuts are largely aimed at the off-budget spending funds such as those for housing, the reconstruction fund and energy infrastructure.

Of course it’s not confined to the commonwealth. State Labor governments have been at it as well, as S&P identified.

Economist Saul Eslake was so incensed by the level of spending and debt by state governments that he recently called for the old Loans Council to be reinstated to put a stop to it.

Sadly, no such mechanism exists for commonwealth governments that suffer the same addiction.