Knives out between Albo and Chalmers: Labor insiders expose the power struggle casting a shadow over the budget… and why the PM is ‘beside himself’: PVO

Power struggle in focus as budget looms

How Tuesday night’s budget is received will be the most important moment of Jim Chalmers’ career.

Not because the success or otherwise of the budget could decide the fate of the Albanese government – although that is certainly a stepping stone as to why it will matter so much to Jim.

The bigger reason is that if the treasurer can successfully land the salesmanship of Budget 2025, it will help him put one foot inside The Lodge…

…and that will be the first step to kicking Albo out.

Everyone knows Chalmers won’t be content rising to the treasurership. His ambition is to become prime minister, and his best chance of achieving that is to help Labor win the next election, albeit narrowly, before using the tightness of the result as the reason why Albo must go.

A successful budget, well sold to the public, is vital to the Chalmers strategy.

Albo is almost beside himself that Ex-Tropical Cyclone Alfred forced him to delay calling the election until after the budget. This allows Chalmers to strut centre stage right before it gets called, thereafter claiming credit for any victory.

Perhaps the only thing that stands in the way of Chalmers ascending to the throne – if all of the above goes his way – are those much-speculated-about ‘skeletons in his closet’ that nobody seems willing or able to specify.

The speculation about what they might be has run wild ever since Chalmers did a profile piece owning up to not being proud of his behaviour in years gone by when drinking too heavily during parliamentary sitting weeks.

I’ve heard it said that Albo won’t leave without a fight, and any such fight would, of course, see the knives come out.

Post-election, even in victory, things could become rather vicious on the Labor side.

Almost ironically, it’s hard to see too much instability on the Liberal side if they end up losing the election.

There really is no one else to lead the Coalition besides Peter Dutton, meaning that in defeat he would almost certainly get a second crack at the top job, if he wants it.

Short of a major turnaround in the polls which sees Labor retain its majority, any result which plunges Labor into minority government can only be seen as a good outcome for a first-term opposition leader.

Especially considering the Liberal Party doesn’t have the same leadership rules that protect the leader in opposition that Labor does.

The cost of a handout 

Getting back to the budget, fiscal discipline really has been thrown completely out the window now. Unfortunately voters no longer seem to care.

They are either desensitised to debt or too worried about their home finances to stop and wonder if the government can afford to keep increasing spending. Indeed, a recent Newspoll found found 80 per cent of us want more government spending to help cost of living.

I’m old enough to remember when Australia had no net debt at the end of the Howard years. Since then, there have been 26 budgets and counting handed down, with the only two surpluses coming in this government’s first two years in office.

They came off the back of unexpected company taxes and mining revenue as commodity prices surged.

Since then, recurrent spending has been baked into future budgets just as these revenue sources have dried up.

If voters no longer care about running another 10 years of budget deficits, how can we expect the politicians to care?

They lead by following the will of the voters. It’s not inspiring but it’s how it works.

Here is a cold, hard fact: a growing percentage of the voting population pay little or no tax really. Whatever they do pay is more than offset by government handouts.

When the tax and spending system has been oriented in that way, what hope do fiscal conservatives have of winning the argument to balance the books and pull recurrent expenditure into line to address the structural deficit?

Very little, is the answer.

What’s the solution? I’m sorry to say, but I haven’t a clue. It’s too late. Those getting handouts now have the upper hand. They are the voting majority. They’ve won. Which means eventually the nation will lose – and lose big time.

Dutton’s opportunity – will he waste it?

One final thought.

Budget week is always about what the Treasurer has to say and what the budget delivers. But don’t forget on Thursday night the Opposition Leader has the floor as he delivers his budget reply speech.

With an election just around the corner, likely to be called next weekend, there will be added importance attached to what Dutton does and doesn’t say.

He’ll take aim at Labor, no doubt. But will he announce any alternative policies?

If he does, will they just be new spending and tax cuts to lure aspirational voters? Or will he be bold and tell us, whether we like it or not, that the budget is out of shape and cuts are the only responsible answer?

The latter is absolutely right, but I don’t see it happening. New spending of his own would turn the proud conservative into little more than Labor-lite. Changes to the tax system, especially tax reforms, would split the difference.

Let’s hope he at least does that. Australia’s tax-to-GDP ratio has crept way too high.