Jim Chalmers is in one of the more enviable positions a treasurer has been in for years.
Inflation just hit its lowest rate of growth since he came to office, unemployment is at 50-year lows, there are interest rate cuts, and there’s a huge political majority after the first Labor government re-election since Bob Hawke’s in 1990.
Chalmers is relishing questions in parliament on all this. His confidence is up.
But in the cold chill of Canberra, Chalmers still shows a look of nervousness.
His big chance for serious economic reform is now and he has to work out whether to take it. If he can’t get a significant reform win with the current economic conditions and such a huge build up to his economic roundtable next month, when will he?
There is hardly a lack of opportunity and ideas.
Chalmers has received 800 submissions to the roundtable, with everything from detailed tax reforms to ideas around road-user charges, artificial intelligence, housing, and research and development.
Chalmers has already attempted to shift the blame for any failure to reform on a lack of support.
“If we fail it won’t be because of a shortage of ideas, options or choices. It won’t be a shortage of courage – but a shortage of consensus,” he said at his National Press Club address last month.
How much consensus will he need?
When the Howard government attempted to bring in the GST, Morgan Gallup polls showed conditional support of about 56 per cent in favour, if it was tied to income tax cuts. The actual consenus came in the form of a 4.6 per cent swing against Howard at the 1998 election, which he won.
If there is consensus. will the Prime Minister back him?
Some Labor people suggest that Chalmers is genuinely keen for reform, but Albanese is guarding his political collateral tightly. Some say it’s the other way round.
Beyond the political risk is that the economic conditions turn down sharply.
“Our economy is not growing as quickly as we would like it to,” Chalmers said on Wednesday.
If Chalmers doesn’t do any major reform the economy could end up in far worse position, especially given productivity is declining and is already at 60-year lows.
And if there is a global shock?
Chalmers has said what happens outside Australia will be the major determinate of the decisions he makes.
“Global conditions will be the primary influence on our economy and on our choices in the government’s second term,” Chalmers says.
The deficit is expected to hit $42bn this year, as gross debt reaches $1 trillion and spending as a percentage of GDP, outside of Covid, climbs to the highest level since Paul Keating was last treasurer.
Maybe it’s an economic crisis that forces Chalmers into some significant reform, in the same way Keating had to react to difficult economic circumstances.
Former Liberal treasurer Josh Frydenberg had a big chance during the pandemic to take advantage of the “no better time than a crisis” approach to reform, but he didn’t, or couldn’t do it.
Chalmers has every chance now to do it.
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