Outlook Conference: Progressive aspirations must wait until budget is shored up

Anthony Albanese speaks at the Economic and Social Outlook Conference in Melbourne on Wednesday. Picture: Arsineh Houspian.

Anthony Albanese has declared he wants to open doors of opportunity for all Australians, but to meet that signature aspiration he’ll first need to restore the nation’s financial foundation.

The Economic and Social Outlook Conference’s big agenda, from lifting productivity to stimulating innovation in the National Disability Insurance Scheme, reflects that there’s a new show in town: progressives are in the ascendancy.

The problem is that this ambition comes at a sky-high cost and that Labor in power will have to go beyond its mini-mandate in May to fund its delivery.

The building block for Canberra’s social and economic transformation is the budget, the busy tools of taxing and spending. That’s not the Prime Minister’s natural terrain, nor most of his cabinet’s for that matter, but as the world economy closes in and as the security outlook becomes more threatening, they’re going to have to become fast learners.

Jim Chalmers is currently fighting the inflation dragon, so can’t provide the traditional cost-of-living support struggling households will be screaming out for as energy costs break through the roof over the summer.

High inflation puts even more pressure on existing programs. Indexation of welfare and other payments, just from higher energy prices, will cost an extra $3bn.

The political shine is about to come off the new government, as it tries to pivot to reform mode. The Treasurer concedes Australia will have to tax more and learn to live within its limited means if the new, improved social edifice of opportunity Labor wants to build is not going to implode.

The Treasurer foreshadowed a holistic approach to the budget, presumably revving up in May: spending tucks, tax integrity and systemic reform.

“I think that anybody facing the sorts of forecasts that we’re looking at now would recognise that there’s more work to do on the fiscal side,” Chalmers said.

“Let’s rebuild the evidence base that informs the decisions in the hope that we’ll get better decisions.”

The Treasurer outlined super-charged, data-rich transparency will be the backbone to the way reforms are pursued: from more frequent intergenerational reports to an evaluator-general.

The reframing of tax expenditures will be a key stop on the road to fiscal sustainability.

Chalmers will be called upon to be the breaker of bad news, the truth-teller in chief, and that started at the conference.

Asked whether Australia can run a functioning economy given the forecast obscenity in energy prices, the Treasurer was blunt and brutal, softening up markets for some heavy intervention.

“I can’t see a situation where the types of outcomes forecast in the budget can endure,” he said.

But there is no enduring Labor project, no Albo legacy, on current settings, so fixing the budget is the only path to long-term social cohesion and economic prosperity.