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View from The Hill: Chalmers’ budget delivers modestly to the vulnerable while keeping the inflation ogre in mind


This budget is the culmination of a tug-of-war between the government to fight inflation and the sirens of the Labor grassroots to help those in need.

The government has taken measures to reduce pressure on the most vulnerable, including in the areas of income support and rent assistance. The critics, especially but not only from the left, will say that it has not done enough.

Treasurer Jim Chalmers says it’s a balance between “doing what we can for the people who are struggling and keeping inflation under pressure”. He told his press conference that in terms of cost of living, “we really tried our best.”

But another group of critics, including the opposition, will argue that the budget was not responsible enough – that it is, in fact, undermining inflationary struggles.

The increases in Jobseeker and rent assistance are modest. Indeed, $40 every two weeks for JobSeeker is smaller than the Morrison government’s $50 increase.

Read more: Jim Chalmers gives a budget for Anthony Albanese’s fighters

But a big boost would have been inflationary, and thus ultimately counterproductive to those it was supposed to help, and many others as well.

While Chalmers insists his cost-of-living measures are limited, some economists will argue that they will in fact add to the inflation problem.

Prime Minister Anthony Albanese’s decision last year to set up the Economic Inclusion Advisory Committee (as part of a deal with crossbencher David Pocock to pass labor relations legislation) can be seen as pivotal in the budget process in recent weeks.

The committee’s report set a benchmark against which the government could be held accountable. The $40 looks more puny compared to the commission’s recommendation for a $256 raise in JobSeeker.

Read more: Budget 2023: Budgeting for tough times is hard – just ask Chalmers

When that commission produced its report, Chalmers brushed aside expectations of what the government could do. But the welfare lobby had loud voices and many allies beyond its ranks. And Labor backbenchers decided it was time to have their say.

The campaign for compassion became intense. Minimalism became untenable.

And then came Treasury’s latest earnings upgrades. They both increased the pressure to do more and made it possible.

Meanwhile, those turnover figures (driven by high employment and high raw material prices) imposed another pressure: to deliver a surplus in this financial year.

This served the economic purpose of demonstrating the government’s fiscal credentials. It also sent a strong political “up yours” to the coalition, which came to the brink of surplus only to be snatched by COVID.

It is true that the projected surplus is followed by a budget that dips into the red again in the coming years. And indeed, given the poor economic outlook it paints, with its prediction of declining economic growth, that could happen.

But recent history shows how things can change in the years that a budget is over. There is another possible scenario. Chalmers can use the looming deficit numbers to cut costs in expensive programs, especially the National Disability Insurance Scheme. This (together with some support on the revenue side) may help to contain those deficits in later years.

Some will criticize the budget for a lack of ambition. Why hasn’t it scrapped some of those Phase 3 tax cuts? Why did it limit its changes to the Petroleum Resource Rent Tax to tinkering? Couldn’t it have gone further with tax benefits for the pension? Doesn’t the government realize that this was the budget calling for boldness, because the next one already has the election in mind? Why be the tortoise instead of the hare?

Read more: Budget spends a lot on support, but won’t make much of a difference to poverty

The answers lie in the nature of the Albanian government and its prime minister. Albanian wants to change things, but to minimize the risk in doing so and maximize the longevity of the government.

While a second term for Labor may seem like a good bet given the popularity of the government and the predicament of the Liberals, there is never any certainty in politics.

Albanians lived in the heart of the disorderly Rudd-Gillard-Rudd era. He values ​​process, order, maintaining public trust, and delivering to the grassroots (albeit less than some demands), without provoking swinging voters.

Those in the middle of the income scale, feeling pressured by escalating interest rates, may feel left out of this budget. This is despite Chalmers claiming there is “a lot (…) for central Australians” such as the bulk billing changes for families with children. But if the budget doesn’t give these people much, it doesn’t openly poke them in the eye.

If this budget has a lot of critics on the edges, they’ll probably find it hard to deliver a killing blow to the core.

Read more: Budget 2023 at a glance: major measures, cuts and expenditures

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