AARON PATRICK: The Budget that would make Jim Chalmers prime minister

Jim Chalmers’ 2025 Budget has provided the foundation for the Labor Party’s election campaign, and a shot at a victory that seemed to be slipping from its grasp a few months ago.

The document is so carefully framed for the political moment that it could turn the Treasurer into the prime minister-in-waiting.

A week after lowering expectations he had much to offer in Tuesday’s Budget, Dr Chalmers sprung a surprise on the Coalition and the Australian people: a $17 billion election-eve tax cut.

Which means the Budget the Government apparently did not want has provided it with what could be the most potent promise of the campaign.

Does it matter that the Budget next year will be $42 billion in deficit and the nation will owe $1 trillion? Or the Government spends more than one quarter of every dollar in the economy?

Of course not! There’s an election to win!

Treasurer’s visit

Dr Chalmers dropped by The Nightly’s Canberra office before presenting the Budget to Parliament. He looked like he was about to collect a prize for employee-of-the-year.

“This budget is about more than putting the worst behind us,” he later told the House of Representatives. “It’s about seizing the best of what’s ahead of us.”

Dr Chalmers and Prime Minister Anthony Albanese know what’s in front of them: an election fought over their economic management.

Australians have suffered over the past three years. Everything became more expensive. Interest rates hit borrowers. Wages rises were taxed. More than half of Australians cut back on essential items such as groceries in 2024.

In the Budget, Dr Chalmers and Mr Albanese are trying to convince Australians they have pulled off the holy grail of economic challenges: busting inflation without driving up interest rates.

“Don’t fire us!” it says. “We saved you!”

‘Modest but meaningful’

As political veterans, they have learnt not to panic. The Budget is calibrated for Dr Chalmers to claim the mantle of financial rectitude. Government spending, as a share of the economy, is forecast to peak next financial year and then slowly – very slowly – taper off.

The tax cut is only $536 a year for most. But Dr Chalmers will, as he tours the country looking for votes, include tax cuts introduced last year that were proposed by Scott Morrison’s Liberal government. For the average Australian, that will be $2548 a year.

Careful to avoid rhetorical over-reach – the tax cut is “modest but meaningful” – Dr Chalmers isn’t adverse to favourable self-commentary. In his speech, used the word “responsible” six times to describe his budget.

A responsible Budget? If you believe spending a big chunk of one of the greatest financial windfalls in Budget history to win votes is responsible.

One example: $1.8 billion on energy subsidies, which will help fund the coal-driven power stations the Government wants shut down.

Because the tax cuts do not apply until 2026-27, Dr Chalmers can avoid because accused of stoking the inflation.

The other option

A truly responsible treasurer would have cut spending in his three previous budgets, giving the Reserve Bank of Australia room to cut interest rates more quickly.

But that would have upset people. Instead, he spent and spent an inflation windfall, prolonging the pain. Now, he promises, the pain is almost over. The budget forecasts living standards are on the rise.

“The Australian economy is genuinely turning a corner,” Dr Chalmers told reporters.

If Australians believe him, and the Labor wins the election, the treasurer will justifiably be able to claim a lot of the credit.

Which would make him the leading candidate to succeed the prime minister, whenever Mr Albanese tires of the perks of office.