Treasurers usually play a careful game of expectations management ahead of budgets so they can pull a rabbit out of their hat on the night and dazzle everyone.
Not so this year.
Jim Chalmers has raised the stakes enormously with his pledges to be ambitious, reforming and responsible all at once.
Three days before the US and Israel dropped bombs on Iran, Dr Chalmers said he was working on making this his most ambitious budget yet.
The uncertainty surrounding the war and the immense turbulence it has brought to the global economy haven’t lessened that intention. In fact, he’s doubled down on it.
So has Prime Minister Anthony Albanese, who told the National Press Club last month: “It is our Government’s most important Budget to date and it will be our most ambitious. It has to be.”
Now, Dr Chalmers has to deliver on the soaring rhetoric.
Not only that, he has to do it amid rising inflation and warnings about unhelpful government spending.
Then there’s the spectre raised by the International Monetary Fund of a global recession if the war is prolonged.
“This will be a responsible budget which is focused on resilience and reform,” Dr Chalmers said on Friday morning, as he unveiled $64 billion in cuts and money redirected.
“There will be more than the usual amount of savings, more than the usual amount of reform, in the face of more than the usual amount of global economic uncertainty.”
Is the hype setting the bar too high?
Finance Minister Katy Gallagher believes they can live up to the expectations they’ve set.
“It’s not just a status quo budget in any means,” she The Nightly.
“It’s doing a lot of heavy lifting, I think, not only to protect us now, but also to set us up for the future.”
She flagged “a number of big packages that knit the budget together” and tell the story of what Labor is trying to do on reform and resilience.
In true Chalmers tradition, there are five pillars to what he’ll present on Tuesday night: fuel security, cost of living and housing, tax reform, productivity, and those “very substantial savings”.
It’s not the same budget he had in mind when he set himself that “most ambitious” test back in February; fuel security and immense uncertainty didn’t feature then.
Yet the overarching theme has remained constant in restoring intergenerational fairness — in other words, giving young Australians the same kind of fair crack their elders had.
“It’s fair to say this is one of the most hotly anticipated and potentially interesting budgets in at least a decade,” was the assessment from Westpac chief economist Luci Ellis.
Already, Labor has shown a willingness to make what Dr Chalmers has called difficult decisions.
The biggest portion of the $64 billion in savings comes from the NDIS, one of Labor’s legacy-building programs.
Health Minister Mark Butler believes he can cut $35 billion from the runaway scheme over the next four years, effectively freezing its funding while a new eligibility test will see 300,000 people either taken off or barred entry.
Yet Mr Albanese insisted on Friday that people would still see “a good Budget based upon Labor principles”.
Most of the focus over the six weeks since parliament last sat has been on what will shift on capital gains tax and negative gearing, both as part of a tax reform package and as a housing measure.
The interaction of the two tax breaks has made property investment an attractive proposition for a whole generation of Australians, locking a younger cohort out of the market as housing prices rocketed.
Dr Chalmers and Mr Albanese both will have to shoulder the burden of explaining why now is the time to cut back on these when they spent much of the election campaign arguing it wasn’t needed.
Instead, the mantra of “supply, supply, supply” has driven housing policy for the past four years.
On top of that, many in Labor — up to now — have still felt burned by the 2019 election loss when policies to cut back CGT and negative gearing, and tax trusts, were seen as lead weights.
It has left much of the heavy lifting to make the case for the changes to others, including a Greens-led Senate committee and advocacy groups.
But Dr Chalmers gave a hint of what he might be saying next Tuesday night.
“The comments that we made at election time reflect the Government’s sole focus on supply and the 5 per cent deposit,” he said on Friday.
“My view is when governments come to a different view on any issue, then the responsibility of the government is to explain why . . . and I think that’s the principle that this government would adhere to if our policies and views changed on some of those important matters.”
Housing dominates the recent budget focus, but Dr Chalmers has been talking for much longer about the productivity piece.
He flagged it as a top priority for his second term in an Insiders interview the morning after the election victory just over a year ago.
It was the initial focus of his roundtable in August before it was broadened to look at economic reform.
And productivity is at the heart of the “Abundance agenda” that gripped Canberra last year, named for the book by American writers Ezra Klein and Derek Thompson.
If Dr Chalmers can get this productivity boost right, that could potentially help with the inflation problem too.
Reserve Bank governor Michele Bullock raised the stakes on that front this week when she said all governments needed to consider how they could help the inflation problem by constraining demand.
Inflation jumped to 4.6 per cent in March as fuel prices soared.
That was almost a whole percentage point up from the February result, which at 3.7 per cent was still higher than the central bank would like to see.
Ms Bullock pointed the finger at State governments too, but it’s Dr Chalmers who has worn nearly all the blame for public consumption and inflation over the past six months.
Both he and Senator Gallagher said the inflation challenge had formed a large part of their thinking in shaping this difficult budget.
“The role the federal budget plays in that in the overall economy probably has become quite politicised recent times,” Senator Gallagher said, choosing her words carefully.
“But we want . . . the budget to help in that regard, and we’re trying to deal with all these pressures coming at us.”
Michael Brennan, chief executive of economic think tank e61, said the intentions sounded positive and the willingness of ministers to take on the NDIS was a good sign the action would match.
“They’re taking on their own program, (and) to some extent, a bit of their own constituency in saying that it’s unsustainable and it has to be pared back,” he said.
“There’ll be a test about both, how do they execute on those plans, and also how much of that do they then spend or reinvest?”
Dr Chalmers wants people to see that the cabinet he’s part of is conscious of the enormity of the task they’ve set themselves.
“Overwhelmingly, any objective observer of the Budget on Tuesday night will conclude that we have taken this savings task very, very seriously,” he said.
“We’ve improved the Budget in every year, and that has been our objective to get those underlying cash balances in better shape.”
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