Treasurer leaves room for last-minute budget adjustments

Treasurer Jim Chalmers in Canberra on Tuesday. Picture: NCA NewsWire / Gary Ramage

Jim Chalmers is about to get a first-hand exposition on how perilous the state of the world economy is when he meets with world financial leaders this week.

Not that he needs to travel to Washington for a proper appreciation of the rapidly deteriorating outlook. There are now almost daily updates to the global outlook from financial agencies with their latest prediction of doom.

The International Monetary Fund has released a new forecast that suggests a third of the world’s economy will shrink next year.

The pace of global economic decay is making the job of putting together a budget in two weeks’ time all the more challenging for the Treasurer – but apparently only in terms of what the economic forecasts look like.

The Albanese government’s spending commitments are now all but locked in.

What may have been true last week of the global outlook, when Chalmers shared Treasury’s latest predictions, would appear to be no longer valid this week.

And while Australia seems to be skirting the edges of a global downturn, this could easily change as well.

The IMF’s language has changed from one month to the next. What was possible in September – a global recession – is now probable in October.

As Chalmers says, the global economy is a “dangerous place”, as if to liken it to a war zone.

He claims he is ­optimistic that Australia won’t go into recession.

But his admission on Tuesday that he would leave the door open to making last-minute changes to the budget was an acknowledgment of just how rapidly things are changing.

And they are not changing for the better.

This is the pre-budget narrative that the Albanese government is now weaving – that the new government couldn’t know how bad things would be.

While it would be unusual anyway for a budget to have been signed off on a fortnight before its delivery, Chalmers is signalling that he is leaving the door open to last-minute changes based largely on his discussions overseas.

Yet what he is suggesting in terms of last-minute changes remains obscure.

There will be no change, according to Chalmers, to the structural spending profile to which Labor is dedicated.

The Treasurer said there would be no recalibration of the spiralling NDIS spend, aged care, health, childcare and defence commitments that have already been made.

So no change to the serious structural spending problems that taxpayers are exposed to.

After shooting down the kite that the Albanese government has been flying over the stage three tax cuts during the past two weeks, there appears to be no change either to the revenue side – aka taxation.

In other words, this budget is all about trying to make room for Labor’s election promises in a narrowing fiscal envelope, considering the significant revenue gains over the forward estimates are heavy on the inward years and diminishing into the future.

So what are these last-minute changes – or “tough decisions” – that Chalmers is talking about?

Forgoing the fuel excise cuts has cost the Albanese government nothing politically.

This cannot be regarded any longer as one of those tough decisions. What would be tough, would be applying a new discipline around the out-of-control spending that the rest of us have to pay for.