Jim Chalmers stokes pre-election budget fight with Coalition

Jim Chalmers has used Treasury modelling to suggest the Coalition would have overseen two-year deficits totalling $55.5bn, sparking claims by Angus Taylor he is ‘politicising the public service’.

Treasurer Jim Chalmers. Picture: NewsWire / Martin Ollman

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Jim Chalmers has used Treasury modelling to suggest the Coalition would have overseen two-year deficits totalling $55.5bn instead of surpluses, triggering pushback from Angus Taylor over the government “politicising the public service”.

As Anthony Albanese and Peter Dutton clash over who can best manage the budget amid an economic slowdown and cost-of-living crisis, the Treasurer on Wednesday will ramp up pressure on the Coalition to reveal its pre-election funding cuts.

Replicating similar political manoeuvring by previous governments in commissioning Treasury analysis, Dr Chalmers said Labor’s back-to-back surpluses would have been deficits if he had banked about 40 per cent of revenue upgrades, which was the average under the Abbott-Turnbull-Morrison governments.

The analysis, which includes the big-spending pandemic period, claims if the lower savings rate was applied in 2022-23 and 2023-24, there would have been deficits of $27.9bn and $27.6bn, instead of $22.1bn and $15.8bn surpluses.

Opposition Treasury spokesman Mr Taylor said “Labor is looking for any excuse for their failure to manage inflation and articulate any coherent economic strategy”.

“Having failed in his plan to politicise the RBA, the Treasurer has now resorted to lows of politicising the public service not seen since the dying days of the Rudd-Gillard government.

“Australians can’t afford another three years of a distracted and desperate Treasurer. The Coalition will get Australia back on track with a back-to-basics economic agenda.”

Dr Chalmers said the Opposition Leader and Mr Taylor, who is advocating a structural surplus rather than one underpinned by revenue windfalls, must “come clean about where their $315bn in cuts will come from”.

He said the government had banked 87 per cent of upward revisions to revenue in 2023-24, found $77.4bn in savings and reprioritisations and restrained spending to 25.2 per cent of GDP.

“How will Peter Dutton pay for his nuclear fantasy and other policies? Unfunded commitments from the Coalition mean harsher cuts. These characters can’t be trusted with the budget or Australia’s economy,” Dr Chalmers said.

Opposition Treasury spokesman Angus Taylor has hit back at new Treasury modelling released by Jim Chalmers claiming that the Coalition would have delivered deficits rather than back-to-back surpluses. Picture: NewsWire / Martin Ollman

“This analysis shows that if we took the approach of our predecessors, we wouldn’t have delivered either of our back-to-back surpluses, we’d have delivered two big deficits.

“Our predecessors said repeatedly they’d deliver a surplus and they went none for nine, instead delivering a trillion dollars of debt and deficits as far as the eye can see. We’ve delivered the first back-to-back surpluses in almost two decades.”

After landing two surpluses fuelled by the post-Covid boom and record resources exports, the May budget forecast a long run of deficits including a $28.3bn deficit in 2024-25, as commodity prices fall, economic growth falters and China’s economy slows.

Mr Taylor said Labor “has done no work … its surpluses are off the back of windfall commodities from a sector it continues to demonise, and taxes from hardworking families who are suffering because of Labor’s homegrown inflation”.

“While the Treasurer pats himself on the back, Australian families know their household budgets are in tatters because of Labor’s economic mismanagement,” he said.

Mr Taylor said monthly financial accounts since November 2021 showed the budget was recording surpluses as Covid restrictions ended, unemployment reached record lows and strong commodity prices fuelled higher company tax receipts.

He said the Coalition’s Covid spending was “temporary and targeted, as reflected in Labor’s budget papers that show the budget was in structural surplus when the Coalition left office”.

Mr Taylor said “Labor is spending more on welfare and public servants while spending less on infrastructure and essential services … Labor has collected an extra $104bn in receipts since the election, yet debt is higher and the structural deficit is worse. This is a high-taxing, high-spending government.”

“Labor has thrown all fiscal rules out the window,” he said. “The Coalition has been clear we will restore the fiscal guard rails Labor has abandoned, including containing spending to less than real GDP growth, committing to a tax to GDP cap, and making productivity and private sector growth a key focus of our economic strategy.”

Finance Minister Katy Gallagher said the Coalition “failed to deliver even a single surplus in nine years, instead leaving Australians with a trillion dollars of debt and not enough to show for it”.

“None of this would be possible if the Liberals were still in charge of the government coffers, and in fact, we would be tens of billions of dollars worse off,” Senator Gallagher said.

“Our budget strategy is striking the right balance between paying down the Liberals’ debt and reducing inflationary pressures, while also delivering cost-of-living relief to households.”