One year out from an election, the Albanese government is girding against a winter of discontent. High energy and food costs, rents and mortgages are pushing some households to the edge. Anxiety is real. Despair is rising.
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Recognition of this grim politico-economic mood is written through every decision and every page of Labor's third budget which has been crafted in the narrowest of economic circumstances.
On the surface, Treasurer Jim Chalmers invokes calm and emphasises the three 'R's - relief, restraint, and reform.
Look deeper and the underlying formula of creative spending suggests Labor is thinking existentially and keeping its options open on election timing.
Hints of an election
Don't be entirely surprised if the federal poll slated for May 2025 occurs this year or earlier in the next.
That means this, right here might be an election budget. If so, is it enough?
That, ultimately, is a political calculation for Anthony Albanese. The golden rule of national politics is that prime ministers go to the people when they think they can win - all the rest is just noise.
Perhaps this explains the government's conspicuous boldness in spruiking the likelihood of inflation coming back within the RBA's 2-3 per cent band this year. It's only a gamble if you wait for the result.
Chalmers tells a good story. He skilfully mixes a genuine empathy for struggling households with a credible rationale for levels of assistance that some will say is parsimonious, and others, reckless.
Much has been written in the lead up to this budget about his degree of difficulty. Inflation remains the chief economic problem whereas the fiscal discipline it requires the government to exhibit, remains the chief political problem.
The government has handled this policy conundrum by providing household assistance direct to providers - thus reducing prices.
Through this, it is claimed that cheaper household essentials like energy and medicines, can be anti-inflationary. Economists disagree, arguing the money saved on these items inevitably turns up as spending in other goods and services.
But the government cannot do nothing. Thus, it has opted for protection of the most vulnerable, through rental relief, reduction in student loans, a cap on medicines, and yet more household energy assistance.
Inflation looms
Chalmers bristles at the suggestion that he could have done more against inflation, declaring the "scorched earth" option would have killed the economy and that his approach will take half a percentage point off the CPI. Hope again?
In the longer term, the balance sheet looks a lot less healthy - deficits next year and ongoing into the mid 2030s.
But that's for another time. Right now, Chalmers understands that the first party to restore a sense of hope in the Australian community will win in 2025. Or perhaps before then?
Mark Kenny
Mark Kenny is The Canberra Times' political analyst and a professor at the ANU's Australian Studies Institute. He hosts the Democracy Sausage podcast. He writes a column every Sunday.
Mark Kenny is The Canberra Times' political analyst and a professor at the ANU's Australian Studies Institute. He hosts the Democracy Sausage podcast. He writes a column every Sunday.
