EDITORIAL: Desperate Treasurer is facing a credibility gap
Australians are as well informed as they have ever been. They expect their leaders to be prepared for disruptions. Ahead of the game. Not behind it.
Federal Budget season is a time when political spin goes into overdrive.
This year the Government’s bid to control the narrative has been disrupted by the war in the Middle East and the escape of the inflation dragon.
Clearly the oil shock from events in the Middle East has been an inflation driver. But the fact is the Government’s love of throwing cash around had already had an impact.
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By continuing you agree to our Terms and Privacy Policy.The Reserve Bank of Australia had lifted the cash rate by 25 basis points to 3.85 per cent on February 4 — before the United States and Israel first hit Tehran on February 28.
Yet Treasurer Jim Chalmers has been reluctant to accept government spending had been a contributor to overheating the capacity-constrained economy — leading to the RBA’s rate hike — even as a multitude of economists warned of the link.
But when RBA Governor Michele Bullock added her voice to the warnings, the gig was up.
On Tuesday, after the RBA lifted the cash rate another 25 basis points to 4.35 per cent — the highest level since February 2025 — she set out the impact of government handouts in the most direct terms yet after a report emerged that the Budget was expected to include a stimulatory tax offset putting up to $300 into the pockets of all working Australians.
“If we are increasing interest rates, what we are trying to do is slow growth in demand,” she said. “To the extent that the government is demanding goods and services of the economy . . . whether it’s direct expenditure or giving money to households to spend on goods and services in the private sector, that adds to demand.”
On Wednesday Dr Chalmers went into deflect mode, arguing the RBA decision was “not about government spending. It wasn’t a factor in the decision”. He added Ms Bullock’s warning on spending was based on a “hypothetical question”.
And he proclaimed the value of savings. “We intend to play a helpful role in the fight against inflation in this Budget, we’ll do that by saving more than we spend overall,” he said.
If only. The Treasurer has a severe credibility gap. Witness his strange claim this week that breaking an election promise “for the right reason” is a way to build trust. Huh?
And who could forget the claims earlier this year that the Government had found “savings” which was actually merely redirecting money to different priorities.
It all smacks of a Government struggling to get on the front foot and to control a narrative that is way out of control.
Even the announcement on Wednesday that more than $10 billion will be spent bolstering Australia’s fuel security and the minimum stockholding obligation will be increased by a further ten days was playing catch-up.
Australians are as well informed as they have ever been. They expect their leaders to be prepared for disruptions. Ahead of the game. Not behind it.
They know what saving means. They know when they are being fed a line. And they hate it.
Over to you Treasurer.
