AARON PATRICK: Signs voters are losing faith in big-talking Treasurer Jim Chalmers

Treasurer Jim Chalmers got bad news this week from an obscure corner of the financial markets.

Interest payments, also known as the yield, on a common type of Australian government debt briefly rose above 5 per cent for the first time in two decades.

The rise, if sustained, will increase interest payments on government debt — a cost estimated at $28 billion this year.

Dr Chalmers, on Wednesday morning, acknowledged the problem while blaming his Coalition predecessors.

“You could expect that when the cost of debt around the world goes up, that has implications for our own Budget, too,” he told ABC radio.

“It is a substantial amount to service that trillion dollars in debt that we inherited when we came to office.”

Debt blame game

Dr Chalmers always blames the previous Coalition government for the debt. He never acknowledges that in opposition he complained more wasn’t spent on the pandemic.

The debt would have been larger if he had his way. Since coming to power, Dr Chalmers has spent more than he has raised, contributing to a structural deficit that is getting more and more expensive to service.

Those deficits will increase the Government’s interest payments by 46 per cent over the next three years, according to Treasury calculations in December.

By 2027-28, the debt cost will be $41 billion, which will be closing in on the Defence budget, at $59 billion, and $60 billion of education spending.

The disruption caused by war and other unpredictable events is exactly why experts encourage governments to balance their budgets, or operate surpluses, during normal times. Because when conditions turn bad, governments can draw on a financial buffer for a bail out.

Signs people losing faith in Chalmers

In the Albanese government’s case, experts have warned since it was elected that big changes are needed to fix the economy. There are no simple options. All will upset someone. Nothing substantial has been done.

There are signs voters are losing confidence in Dr Chalmers. On Tuesday, a Sky News opinion poll conducted by the YouGov research firm over the past week found 53 per cent of people feel Dr Chalmers is doing a good job of managing what it called a “cost-of-living crisis”.

Only 2 per cent thought he was doing “very well”. Inflation was nominated as the top concern by a big margin: 41 per cent, compared to immigration and housing costs, which were both at 10 per cent.

Conditions aren’t improving. The National Australia Bank this week tipped inflation would hit 5 per cent, there are fuel shortages in country areas, and a modest income tax break coming in July has already been wiped out by higher prices.

When he publishes the 2027 budget in two month’s time, Dr Chalmers can choose between policy reform and financial tinkering.

The former would be politically difficult, but could make his reputation. Because, at the moment, the Treasurer talks a big game while doing little.