PAUL MURRAY: Budget shambles from Jim Chalmers has to stop, as do the handouts

It’s a democratic truism that a nation gets the government it deserves.

Any party that wins nearly two-thirds of the seats in the House of Representatives carries with it a massive electoral mandate, even if it got only one-third of the vote.

Consequently, as applied to the Federal Budget on May 12, that mandate translates into an enormous burden on the Albanese Government to give Australians the leadership they deserve in trying economic times.

This cannot be a Budget that shirks the many difficult issues facing the nation. Some of the necessary solutions are potentially unpopular and would require substantial political skill to co-opt citizens to the cause.

The Government may have only one more opportunity after this one before it goes to the polls — and pre-election budgets are never tough. If there were to be two more budgets on the usual timetable, the last would be delivered only days before the final possible election date in 2028, making it highly unlikely.

So this is Treasurer Jim Chalmers’ best chance to go hard and show he is more than a flim-flam man whose spin consistently outweighs his performance.

Even if he does want to have a crack, will he be allowed to?

Apart from the crashing failure of the Voice, Anthony Albanese has been an overly-cautious and relentlessly political Prime Minister, preferring to nudge the nation further to the Left as a measure of what he judges to be success.

Albanese’s primary setting is for Labor to remain in power, rather than to pursue any much-needed changes that might consume political capital.

The challenges thrown up by the war in the Middle East mean Albanese is now exposed and vulnerable to the nation’s heightened expectations — and he risks coming up very short.

Labor has been much more successful at providing political narratives that resonate with voters than at transforming those storylines into economic gains.

The most obvious failure has been Chalmers’ attempted deceptions about fighting inflation, which complicates this Budget and must be set aside if he is to genuinely address the national malaise.

Chalmers has gaslighted Australians that excessive government spending has not contributed to the failure to bring inflation under control. When Labor was elected, government spending was 24.3 per cent of GDP. This financial year it will likely hit 26.9 per cent.

As this column has covered in detail, Chalmers lost the inflation argument to a host of economists far wiser than him, including, belatedly, the governor of the Reserve Bank.

We are now paying a heavy price for his intransigence as the inflationary impacts of the war bite when our inflation rate is at the top of comparable nations, all of which are much better placed to ride out the storm.

The nation has woken up, Chalmers’ rhetorical cause is lost, and the Treasurer has no option but to cut spending if the government is to regain any credibility.

To put it bluntly, the bullshit has to stop. So do the handouts, other than to those in real need. This Budget is where the buck stops.

The great fear is that Albanese and Chalmers will spend the taxation windfall headed their way from higher commodity prices caused by the war instead of banking it.

“Anthony Albanese has fallen short of committing to a net cut to government spending in the May budget, with the war in the Middle East forecast to deliver a $30b boost to the government’s tax take over the next four years driven by high resources prices and inflation,” The Australian reported on Monday.

“The Prime Minister’s refusal in an interview with The Australian to commit to a net savings package follows Jim Chalmers doing the same thing a fortnight ago, leaving open the option for Labor to claim a better budget position on massive windfall gains while increasing spending.”

Sly politics, terrible economics. That would be the worst possible outcome when the nation deserves solutions, not more spin.

With inflation likely to return to the four per cent band within months as a result of the war, any increase in spending in the Budget would supercharge the likelihood of even more interest rate rises this year.

At the front of the Government’s agenda should be the NDIS. Never wasting a crisis means there won’t be a better opportunity to cauterise this open wound.

Former opposition leader Bill Shorten walked away from politics, defeated by the challenges of reining in the scheme which is on the verge of becoming a bigger drain on revenue than Medicare. Unfortunately, those he left behind to deal with it have even less ability.

When it was started under the Gillard Labor government, the NDIS was predicted to cost $13b a year in full operation. It is now running around $55b and is estimated to hit $100b within a decade on its current growth pattern.

The Budget will be a failure without a complete overhaul of spending on this inherently worthy project and a return to its original parameters. This is where some really big savings can be made.

Similarly, it will not be enough for Labor to quietly crab-walk away from its net zero folly which is another massive drain on the Budget through subsidies and multiple handbrakes on economic growth.

Having rediscovered during this crisis the fundamental importance of fossil fuels — other than unhinged Climate Change and Energy Minister Chris Bowen, who has become a national laughing stock — the Government needs to do more than temper the rhetoric.

Fuel self-reliance can no longer be kicked down the road for another day. Which is why comments by Transport Minister Catherine King about the calls from Nationals Leader Matt Canavan to increase drilling for oil were deeply disappointing — if not disarmingly illogical.

“I do find it passing strange, Matt Canavan is trying to take us back to the 1990s or 1980s not understanding that the world has moved on,” King told the ABC. “The world’s moved on in terms of energy security, and we’ve got this incredible resource here (renewables) in this country that lots of other countries don’t have.”

What? Which countries have no sun and wind?

Like Bowen, King can’t see that the mad scramble for fossil fuels around the world means it hasn’t moved on. Australia can’t move because of our 91 per cent dependency on them.

And since when has self-sufficiency been old fashioned?

This in a nutshell is what happens when so called “progressives” get hold of energy policy. There’s nothing progressive about an Australia that can’t look after itself.

West Australians know that story well. Or should. Who knows what young people are taught about our history?

We were a “mendicant” State until 1959 when we got political leaders who decided that needed to change. David Brand and Charles Court transformed WA by developing our resources, often against substantial resistance.

The reason why we became wealthy wasn’t an accident. They made it happen.

Labor needs to reset its net zero policies and reinvigorate our domestic oil industry because far worse energy crises are just over the horizon. This Budget offers an opportunity to start.

In King’s new world, it’s OK for her leader to traipse around Asia trying to find more oil-based products, but wrong for us to develop our own oil resources.

Unfortunately, Albanese’s ploy of trading our reliable supply of natural gas for diesel means any opportunity to increase taxation on our gas exports in this Budget has probably vanished.

Which further highlights the screaming need for genuine tax reform. NB: Tinkering with tax rates in a budget is not reform.

Canberra has not seriously addressed taxation since the Henry review in 2008 which delivered 138 recommendations for long-term structural reform in 2010.

But the Rudd Labor government lacked the political will to overhaul the system, turned its back on Henry’s package and cherry-picked just one controversial mining tax, which eventually contributed to its downfall.

Chalmers has clearly been examining a range of new tax options, leaking bits and pieces to various arms of the media to measure public opinion.

Whether he comes up with new revenue streams that are anything more than disguised wealth taxes is yet to be seen. The need for an equitable tax system remains as fundamental as ever.

If Chalmers were serious when he talks about the intergenerational inequity which is excluding many young Australians from home ownership, he would not lumber them with more government debt in this Budget.

And he could get real about the scandal of our declining productivity which he has studiously avoided tackling for four years.

This stuff is basic. It’s what the party of Hawke and Keating provided a grateful nation back in the 80s and 90s — and could again.

Unless, in Catherine King’s words, Labor has “moved on” from that too.