Treasurer Jim Chalmers is bracing for grim news this week in Washington DC from the world’s pre-eminent financial movers and shakers.
He will attend the annual meetings of the International Monetary Fund and the World Bank.
The assessment by these executives of the planet’s largest financial institutions will be discussed with his counterparts among the G20 finance ministers and central bank governors.
It doesn’t come more high-powered than this and it fills Chalmers’ old boss, Wayne Swan – the Rudd government’s treasurer at the time of the Global Financial Crisis – with a certain sense of déjà vu dread.
It was at similar meetings in 2008 that Swan took on board the portents of the looming financial collapse and adjusted his budget accordingly – and not without criticism from his political opponents.
Chalmers will use this “most up-to-date” appraisal of the “rapidly evolving global situation” to ensure his budget in just over two weeks is an informed response to the challenges he describes as “gathering storm clouds”.
Already “rampant inflation, skyrocketing energy costs and the threat of recession in some major economies” are threatening to stymie the government’s tasks of repairing the budget, and working with the Reserve Bank in taming inflation while at the same time delivering cost-of-living relief.
Chalmers and Anthony Albanese see this as their immediate and most urgent concern.
On the weekend the Prime Minister stated three times that his promise to implement the stage-three tax cuts had not changed.
The reason is simple.
The tax cuts he says are due in 2024, “we’re producing a budget in October 2022,” he said.
In other words, the tax cuts that on latest estimates would blow a $243 billion hole in the already bleeding budget can safely be put on a longer finger.
Besides, Albanese can’t ignore the extremely inconvenient fact of a promise he kept repeating in the run-up to the May election that he would deliver the already legislated stage-three tax cuts.
There’s no doubt many of the factors that made this flattening of the tax scales and their generosity to wealthier Australians contentious the moment they were announced existed five months ago.
In fact, their unfairness and unaffordability were even more obvious in light of the Russian invasion of Ukraine and its impact on world energy prices, supply chain disruptions also thanks to the pandemic, and the beginnings of aggressive monetary policy by the world’s central banks.
Undeniably, the situation has continued to worsen.
Swan told the Nine Network, “any government that sat down in this environment and said they weren’t going to review all of the policy settings in view of what’s gone on would be sticking its head in the sand”.
The tax cuts – their cost and fairness – are a policy setting that cannot be ignored as they approach, but the Opposition is taking a very narrow view saying scrapping them in the next two years “would be an unforgivable and ridiculous mistake”.
More than that, Peter Dutton says: “This is not about tax cuts but whether you can trust Anthony Albanese and the Labor Party.”
Of course, it’s about tax cuts but would amending them to make them fairer and more affordable be an egregious breach of trust?
Especially if in the run-up to the May budget in nine months’ time, the Australian and world economies are in a worse situation than now – economist Nicki Hutley is not alone thinking this is more likely than not.
Then voters would be hoping Albanese would deliver on their trust in his government by doing what is in the nation’s interests in light of changing realities.
This is the broader trust issue at stake in this whole discussion: It is a world away from Julia Gillard’s “no carbon tax promise” – the lie here was her opponents calling her carbon “price” a tax or Tony Abbott’s slashing and burning in his government’s first budget when he said he wouldn’t touch health, education, the ABC or SBS.
Albanese is right not to rush to break his promise, but he would be wrong not to re-evaluate it in light of what happens in the months ahead.
Another Australia Institute poll released at the weekend suggests a majority of Australians expect no less.
Paul Bongiorno AM is a veteran of the Canberra Press Gallery, with 40 years’ experience covering Australian politics