When a treasurer promises “budget savings”, Australians should listen carefully. Because a saving on the government’s balance sheet can become an extra expense on yours.
Jim Chalmers is signalling further savings ahead of the mid-year budget update, while maintaining that Australia should avoid recession.
That’s a difficult balancing act: contain inflation, support struggling households, and protect the services people depend on.
But we should judge this package by where the savings come from.
Cutting an ineffective program is sensible. Reducing wasteful procurement is sensible. But cutting access to essential care can leave families paying privately, or going without.
The budget might look healthier while the household becomes poorer.
My view is that Chalmers needs to make that distinction explicit.
There are legitimate reasons for restraint. Government spending can add to demand when the economy is already struggling to supply enough goods and services. Rising borrowing costs also leave less room for other priorities.
But spending has different effects.
Investment that expands housing supply, improves energy reliability or builds workforce skills can help address the shortages pushing prices higher. Cutting it may improve today’s figures while making tomorrow’s problems harder.
Then there’s household relief.
People facing rising repayments and expensive groceries need help. Yet broad cash payments could stimulate demand and complicate the inflation fight.
That makes carefully targeted support worth considering, alongside measures that reduce essential costs by increasing supply.
Avoiding recession matters, too. Losing your job is a devastating price to pay for getting inflation down.
Still, reassurance needs evidence. Chalmers should explain the risks, the assumptions behind his outlook, and how proposed savings affect employment and services.
And the opposition should name its alternatives clearly. Demanding cuts is easy; explaining their consequences takes more courage.
The test for this update is whether it improves Australia’s finances while protecting people with the least room to absorb another hit.
Because a government hasn’t solved the cost-of-living crisis if it simply transfers more costs to households.
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