Economy

As the weeks roll by, it’s becoming easier to believe that the inflation task is slipping away from the government and central bank authorities. Inflation numbers have already exceeded predictions, even after seven consecutive increases in the cash rate.

The Albanese government spent the past week coming to grips with theory versus reality in government. The vast gap between the budget handed down by Treasurer Jim Chalmers and the media’s reporting of it is still being processed by government MPs. Labor’s first budget was a restrained affair: fiscally responsible while fulfilling some specific election promises, and squarely directed at fixing the mess left by the Morrison government. What could possibly go wrong?

It is accepted in some circles that you can’t boil cabbage twice. Yet apparently this thinking doesn’t apply to recycling political leaders – or rehashing their worst ideas – irrespective of how hopeless they have been in government and of the damage they have done to the national interest. Two cases in point are the threatened resurgence of Donald Trump in the United States, and Boris Johnson’s soggy pitch to reclaim Britain’s prime ministership. And they have lessons for us here.

Jim Chalmers is no stranger to the dynamics and pitfalls of federal budgets. He has worked on 16 of them in and out of government – as a staffer, adviser, shadow minister and finally, this week, at the helm himself. On Tuesday, in delivering the first Labor budget in almost a decade, he turned convention on its head. Most obviously, he presented his fiscal reckoning just five months into the government’s term and well ahead of the traditional May scheduling. The treasurer was firmly of the view he couldn’t wait another seven months to tell Australians the true state of the economy.

It took Liz Truss just 45 days to destroy Margaret Thatcher’s life’s work. For 40 years the idea that tax cuts for the rich would trickle down to help the poor has not just dominated the rhetoric of Western politicians but aligned the ambitions of those who already have the most and those who wish they did. Truss’s tax cuts, however, were so excessive and so poorly timed she actually forced London’s bankers to admit they were bad for the economy and the British middle class to admit they were bad for society.

Reports this week alleging that doctors had made false claims totalling as much as one third of Medicare’s annual budget has pointed to more than just potentially significant weaknesses in the Medicare system. It has again highlighted the impact of the profit motive among medical clinics run by private corporations that are not necessarily Australian owned.

In talking about wellbeing as part of the budget, Chalmers and his colleagues are trying to appeal to a community transformed by the impacts of a pandemic as much as by current economic turbulence. But they are also trying to speak to a range of groups they have relied upon for electoral success.

As the world reassesses its reliance on so-called neoliberal economics, and particularly its faith in market forces, it is important to recognise that the effectiveness of those forces depends on their surrounding regulatory frameworks.

The ghosts of broken promises past are spooking the Albanese government as it prepares to unveil its first budget on October 25. More specifically, the prime minister is determined not to give his political opponents the chance to criticise him on the issue of trust just after an election where integrity in government featured heavily.

Deep in the bunker that is federal Parliament House’s cabinet room, the Albanese government’s economic brains trust spent much of Tuesday strategising about Australia’s response to what the treasurer calls the ‘gathering storm clouds in the global economy’. The expenditure review committee is chaired by the prime minister himself.