Australian Economy

Charter of budget honesty was meant to avoid post-election nasty surprises

With key commodity prices running well ahead of forecasts, The Australian Financial Review asked the Treasurer how Australians could expect Labor to use the money: spend it, or bank it and reduce the debt.

Dr Chalmers said people should not expect there to be any more money, citing “not disclosed or booked” expenditure left by the Coalition.

What exactly those challenges are will be revealed at a later date; likely in a “blunt and frank and upfront” statement when Parliament returns mid-year.

But the message was clear: don’t expect the budget to look any better in October. In fact, it could look worse, and it’s all the Coalition’s fault.

The Charter of Budget Honesty tried to avoid this kind of situation with the pre-election budget statement signed off on by the heads of Treasury and the Finance Department, and released about 10 days into the campaign.

But in politics, there’s always a way around honesty.

Committing funds to programs that won’t be enough, delaying decisions to later years, using one-off grants to pay for ongoing expenditure, and using rosy economic assumptions are all ways of propping up the bottom line.

Whether the Coalition left such landmines will become apparent in coming weeks and months; and no doubt any accusations of skulduggery will also be hotly contested by the new shadow treasurer.

Legitimate or not, Dr Chalmers’ new narrative will buy Labor flexibility; at least until it hands down a new set of books in October. It also sends a clear message to his colleagues that the cupboard is bare, so don’t expect more.

But with the cost of living set to rise further with a huge increase in power bills, record high prices at the bowser and strengthening inflation, Labor will come under immense pressure to help.

Prime Minister Anthony Albanese on Friday said Labor would do more on the cost of living, and he was exploring support “in addition” to what was announced by both sides before and during the election.

But with inflation “almost out of control”, according to the Treasurer, more spending could add fuel to the fire while also adding to the debt, and if that happens, there won’t be anyone else to blame.

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