Sometime after midnight on a freezing morning in August 2002, 24-year-old Jim Chalmers swum the length of the fish pond at University House at the Australian National University. Chalmers was an ANU alumnus, completing a PhD on the leadership of Paul Keating. Back then, he worked as a researcher in Labor’s national secretariat and had just wound up work on a party review spearheaded by Bob Hawke and Neville Wran. He went to the pub. A few beverages in, someone mentioned Hawke had swum the length of the University House fish pond half a century before. Fortified by brash laddishness, history and beer, Chalmers waded in and performed a re-enactment.
Twenty years later, Chalmers returned to the ANU as the federal treasurer and shared this anecdote with a group of elite scholars. Youthful hijinks were repackaged as a story with a moral. Chalmers told the group it was great to mirror your heroes, but people who wanted to make the world a better place needed to offer more than homage or mimicry. They needed to “walk further, and forward” – a theme he’s played with since his first speech to parliament. Michael Cooney, a close friend since their ANU post-grad days, says Australia’s treasurer is one of the few people of his acquaintance with the brio to dive into a fishpond in the dead of Canberra’s winter “and the poise to make such good use of it”.
On Tuesday, Chalmers will have his chance to walk further and forward, defining himself, defining the new government, when he delivers the Albanese government’s first budget. It’s a big moment for a new treasurer only five months into the portfolio. Nerves would be understandable. But he’s a veteran of the ritual. Chalmers has staffed 16 budgets as a backroom adviser in opposition and in government. In the parliamentary parlance, this makes him the father of the Canberra lock-up.
Chalmers has known the secretary of Treasury, Steven Kennedy, for 15 years. His chief of staff, Claudia Crawford, worked with him when they both worked for Wayne Swan, the Labor treasurer who piloted Australia through the global financial crisis. He understands the bureaucracy and the regulators. The econocrats and their rituals are as familiar and comforting as a pair of old socks. Katy Gallagher, the finance minister, is a friend as well as a colleague. Gallagher is regarded by many cabinet colleagues as the EQ of the Albanese government. The treasurer says preparing a budget with her is like being “hit in the arse with a rainbow”.
Given his political apprenticeship, much about being treasurer feels very familiar. But Chalmers is making two transitions. The first is from the backroom to front of house. The second is opposition to government.
Chalmers advised Swan during the global financial crisis. In opposition, he helped craft pre-election policy during a global health emergency that became a supply shock. In government, he’s assembling his first budget in the middle of a global inflation shock, with rising interest rates and the potential for major economies to tip into recession. While market analysts scan the horizon for a hard landing, flood waters in eastern Australia continue to rise, inundating crops and property, creating a new round of supply shortages and inflationary pressure.
The treasurer spent the Rudd-Gillard years as a private actor, often in the rooms where it happened, never on the news. This backstory makes him both a veteran and a fresh, next-generation figure; as one colleague puts it, Chalmers is the class captain of the parliamentary intake of 2013. The class of 2013 included a number of former senior staffers, freed hostages, decoupled from the feuds and intrigues of their mentors. The unofficial motto of this cohort is never forget, never repeat.
When we speak this week, I ask Chalmers to tell me what he’s learned from his privileged vantage point. He says three things. If you want to stay in government, you need to do big things slowly and little things quickly. Pacing always matters. Unity matters. If there’s “not a collective coherence to the cabinet then you compromise your achievements”. And the third is a lesson about time. It takes an eternity to win government, and you can be past-tense in the blink of an eye. “You wake up one day and it’s finished, it’s over. It goes so quickly.”
Promises, problems and puzzles
Chalmers hails from Logan City, south of Brisbane. He lives 900 metres from where he grew up. Logan is classic struggle street. The treasurer’s constituents in the seat of Rankin live on the frontline of the current inflation shock and they won’t benefit from stage-three tax cuts costing the budget $254bn over 10 years. Tuesday’s budget will also see the end of the low- and middle-income tax offset, a tax break worth up to $1,080 a year.
The treasurer’s mother is a nurse who worked night shift. His father, a courier driver, left the marriage when Chalmers was 13. He has two older sisters but was home alone at night for most of his adolescence. He says he was a badly behaved kid who could have spiralled. A high school history teacher found a way to reach him and give him a sense of purpose. Chalmers tracked towards politics through university, culminating in the doctoral thesis at ANU. He worked in the Queensland bureaucracy, then Labor politics, with the organisational wing the entry point.
Chalmers met Anthony Albanese in the same year he staged the Hawke homage in the University House fish pond – 2002 – when he worked in Labor’s national secretariat with Tim Gartrell, then an ALP assistant national secretary, now Albanese’s chief of staff. At their first meeting, Albanese was in a tracksuit. Gartrell was helping him move apartments. The two struck up an easy friendship. Albanese was close to Swan and used to visit the office frequently during the long nights of Rudd-Gillard. Often, Albanese would have a nightcap with Chalmers. The prime minister and the treasurer share a March birthday, although there’s a 15-year age gap.
This relationship survived the complexities of the Rudd-Gillard civil war, but was tested after the 2019 election. After Bill Shorten lost, Albanese hoped to take the party leadership unopposed given he had support from the overwhelming majority of the left faction and from chunks of the right. But Chalmers was encouraged to run. A next-generation rightwinger from Queensland as federal leader was considered a smart response in some quarters of the party to the devastating election result, and Chalmers gave stepping up serious thought. But ultimately, Albanese got his wish. He would lead by acclamation. Chalmers would be shadow treasurer.
Wanting the same prize frayed their relationship. Things have turned a corner, but it took time, patience and demonstrations of goodwill to restore equilibrium. Maintaining that equilibrium will be critical to the success of the new government.
It is possible for prime ministers and treasurers to be too close. Josh Frydenberg, who bunked in with Scott Morrison at the Lodge during the pandemic, and was bundled out of parliament in May in a visceral, anti-Morrison swing, could perhaps shed some light on the perils of proximity. But avoiding poison in the relationship is also critical. Governments work best when prime ministers and treasurers trust one another and pursue common objectives. Right now, the first Albanese-Chalmers budget has to deliver election promises and set signposts to the future. But the challenges the new government faces are already crowding in and things will get harder as time passes.
The global economy is volatile. The budget is in structural deficit, and spending on important social services and defence is baked in and rising. So is the interest bill on the accumulated debt. The budget has a revenue problem, and Labor just won an election by shedding the controversial revenue measures voters rejected in 2019.
There is an obvious tension between maintaining election promises and doing what needs to be done. With Albanese’s endorsement, Chalmers recently began making the case for winding back the fiscally irresponsible stage-three tax cuts that Labor promised to keep in the run-up to the May election. But that particular conundrum won’t be resolved in next week’s budget. Having lost elections in the past because of perceptions of scary taxes and broken promises, there is collective paranoia about not repeating past mistakes.
I wonder if Chalmers thinks Labor needs an explicit mandate at another election to bring the budget back in order. The answer is clearly no. “I don’t think our major budget challenges can wait years down the track,” he says. “I think it would be strange to identify pressing structural spending pressures and say we can’t deal with them for four or five years.”
The treasurer wants next Tuesday to be the start of a conversation that will span four budgets. “I’ve got three little kids at home,” Chalmers says. “We do a lot of jigsaw puzzles. When you tip the box out and you’ve got 100 pieces or 500 pieces and you’ve got all this jumble, what do you tell your kids? You tell them to start with the corners. The corners are inflation, another corner is the wasted decade – skills shortages, an energy crisis, an aged care crisis, wage stagnation. Another corner is floods. How are we going to fund the support people need and deserve?
“You start with the corners, with the edges, and you fill it in. We might have four budgets this term. Three, maybe four. I’ve tried to think about this journey not as a budget every now and again, but three or four budgets that we colour in over time.”
I wonder whether or not the journey from the corners of the jigsaw to the centre requires some kind of structure or scaffold. Something like the Henry tax review that was convened by the Rudd government after the “Australia 2020” summit in 2008. Does a conversation like this need an event to give it both momentum and a focal point?
Chalmers can’t be definitive on that point because a decision like that is always collective. But the treasurer’s predisposition is clear. “I don’t want to rule out some form of formality [like a review] but it’s not my inclination. I feel like there is a structure around the current conversation and that’s a bit different to the immediate aftermath of the 2020 summit.
“I do want to engage people, engage experts, have a structured conversation, but I haven’t instinctively reached for a review headed by a person or a panel because I feel like people broadly understand the issues.”
Walking further, and forward
Chalmers says Keating remains the gold standard in political communication about the economy. “What he did best was include people in a conversation about the economy and talk up to them rather than down to them,” Chalmers says. “I think about that almost every day. How do I take the complexity of the economy and the budget and not dumb it down but explain it and level with people about what we are grappling with; try and give them the sense that there’s a lot of 50-50 calls in managing the economy. That’s the sense I want to give.”
He acknowledges he’s learning on the job. “I don’t always do that eloquently or elegantly. You are always trying to find a balance but I really try and talk up to people rather down to people and one of the main reasons I’m trying to be different to my immediate predecessor is I think people are sick of the schmaltz and the fakeness of economic commentary. They want something real, even if it’s a bit spiky.”
Real and spiky is the unavoidable fact that the budget needs more revenue. Despite the enormous pent-up need in Australia after a decade of policy drift, the times also call for expenditure restraint, both to subdue inflation and rebuild the fiscal buffers in the event of a new global downturn.
Chalmers will unveil a temporary windfall on Tuesday. Tax receipts will be revised up by more than $100bn over the forward estimates, but that bonanza will quickly wash through. One key test of policy seriousness on Tuesday night will be how much of that windfall Labor spends.
Looking ahead, the treasurer says the response to the challenges of our times will require different strategies than the ones Hawke and Keating deployed in the 1980s to transform Australia’s economy and set the country up for decades of economic expansion. Doing what needs to be done will involve Albanese and Chalmers walking further, and forward. This week I ask Chalmers to define what that means for him.
He says you can’t pay tribute to Labor leaders past by retracing their steps or swimming in the same pond. “Our equivalent is delivering clean, cheaper and more reliable energy, it’s turning the massive multibillion superannuation pool to our advantage when it comes to our national economic priorities,” Chalmers says.
“Looking forward for us means doing something meaningful about climate, it means getting the human capital piece right, getting the investment flowing in modern ways, and not photocopying agendas from the 1970s or the 1980s.”
At the moment, the central policy battle in the portfolio is inflation. “I feel the cost of living thing properly because you don’t have to be a genius to understand the pressure people are under,” Chalmers says. He understands the political stakes. In 2025, voters will judge Labor’s performance on its merits, and the mark will be pass or fail. “There is pressure,” he says. “And I feel that pressure every day.”
