The most frustrating thing about Jim Chalmers is that he has so many of the qualities needed to become a much better Treasurer.
He is intelligent, highly educated and shaped by a background that should keep an economic policymaker firmly connected to the realities facing ordinary Australians.
He is certainly not a nepo-baby playing at being a man of the people.
His rise from working-class Logan in Brisbane to the federal Treasury ought to represent a powerful Labor success story.
Instead, it is increasingly highlighting the gap between recognising disadvantage and understanding what is required to overcome it.
The easy criticism that he lacks an economics degree — a point made by me and others — should be set aside. Paul Keating and Peter Costello did not have one either. Chalmers holds degrees in commerce and arts, first-class honours in public policy and a doctorate on Keating’s leadership as prime minister.
His weakness is not a lack of education. It is a reluctance to re-examine the assumptions he carried with him into office.
Growing up in Logan, the electorate he now represents, should give Chalmers an instinctive appreciation of how inflation hits households without financial reserves. His Queensland background should also remind him how little patience voters beyond the progressive metropolitan bubble have for ideological self-congratulation.
‘Chalmers is intelligent, well-educated and comes from the sort of background that ought to keep an economic policymaker nicely grounded,’ writes Peter van Onselen. (Jim Chalmers is pictured with his wife, Laura)
Chalmers’s own rise shows what education and opportunity can make possible. The bigger task is creating an economy in which others can achieve similar progress, particularly through the private sector rather than solely within politics.
Chalmers entered Labor’s tribal world at a young age and built most of his career within it. Pauline Hanson criticised him during the week for lacking significant private-sector experience. Yet neither that nor his long association with Labor rules him out of higher office. Keating, after all, was hardly a corporate executive who entered politics late in life.
The crucial difference was that Keating learned to look beyond the institutions and prejudices that had shaped him.
He recognised that standing up for working Australians involved more than preserving existing arrangements or promising a larger government payment. It required a more productive economy, one capable of delivering rising living standards.
As Keating often put it, expanding the pie is just as important as debating how it should be divided.
That principle confronted Labor’s traditional economic instincts. Protection may preserve the privileges of an industry while leaving everyone else worse off. Shielding the economy from competition can also prevent the innovation and efficiency gains that genuine competition brings.
Keating did not enter Treasury with all the answers. But he allowed the responsibilities of office, expert advice and economic reality to reshape his views.
The Campbell Inquiry, commissioned by the Fraser government, delivered recommendations that remained largely unfinished business. I recall Keating joking with me that, after becoming Treasurer, he found the report sitting unused on a shelf.
Paul Keating is pictured with his former wife, Annita van Iersel
Under Bob Hawke and Keating, Labor floated the dollar and liberalised the financial system. Their broader reform agenda also dismantled tariff barriers and transformed Australia’s tax system.
These were politically hazardous decisions, taken because Labor understood that its social ambitions ultimately depended on a successful and productive economy.
Chalmers studied the man, but too often he seems to have missed the lesson.
His more immediate apprenticeship was with Wayne Swan, for whom he served as chief of staff. Swan deserves some credit for helping steer Australia through the global financial crisis. But emergency economic management is a different task from building a lasting reform settlement.
My concern is that Chalmers has absorbed more of Swan’s political defensiveness than Keating’s intellectual restlessness. He is fluent in the language of fairness, inclusion and investment. The harder question is whether his policies make it easier to produce, compete, employ and take risks.
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Consider Labor’s expanded five per cent home deposit scheme. It removed income caps, uncapped places and raised property price limits. Helping more buyers bid for scarce housing risks pushing prices higher before supply catches up. Getting someone over the deposit hurdle is not the same as making the house more affordable.
Or take the Australian Taxation Office credit card debacle. A surcharge ban promoted as consumer relief was followed by the tax office deciding to stop accepting credit cards. Small businesses faced losing a cash-flow tool until Chalmers announced taxpayer funding to keep payments going until the end of the financial year. If Albo is to be believed, he forced Chalmers’ hand to make that change.
A foreseeable implementation problem became an expensive rescue operation. That is what happens when the political appeal of a policy runs ahead of attention to how it works.
To be fair, making the $20,000 small business instant asset write-off permanent is a useful investment measure. So are efforts to streamline approvals and reduce regulatory duplication. But they are relatively minor initiatives.
And those measures need to form a consistent economic approach. It makes little sense to promise businesses less red tape while leaving them scrambling over how they can pay their tax bills.
With weak productivity constraining the economy and the Reserve Bank lifting rates again in September, the test is whether the government’s overall direction expands productive capacity and restrains inflationary pressures.
Global shocks matter, but they also make domestic discipline more necessary. They can’t be used as an excuse.
Chalmers should be asking what government can stop doing to help. Which spending fails to justify its cost? Where does regulation protect insiders at everyone else’s expense?
Fairness can’t be measured solely by who receives assistance. It must include who pays for inefficiencies.
There is, of course, a substantial obstacle sitting in the Prime Minister’s office: none other than Albo himself.
Keating had Hawke, a leader capable of building consensus around difficult economic changes. A Rhodes scholar who understood economics deeply. Chalmers has a PM whose political understanding owes far more to factional combat and a lifetime on the public teat, rather than to economic reform.
Albo’s natural instinct is to manage Labor’s constituencies. The Treasurer’s responsibility is to challenge that when their demands conflict with the national interest.
John Howard made precisely this point during the week, arguing that a prime minister and treasurer need ‘constructive tension’. Chalmers should pay attention to Howard’s words. A Treasurer’s usefulness can’t be measured by how rarely he inconveniences his PM. Sometimes making life difficult for the bloke in charge is precisely what the job requires.
Chalmers lacks the additional authority of being party deputy. But being overruled after making a serious case for reform would be one thing. Failing to make that case because he fears being overruled in the first place is quite another.
Albo’s dominance might explain the limits on Chalmers’ authority, even his character. It can’t excuse the limits on his ambition for the economy.
Daily Mail political editor Peter van Onselen says Jim Chalmers had all the ingredients to make a great Treasurer – apart from one crucial one
Labor’s ascendant Left further complicates matters. A Queensland Right Treasurer can’t assume that being good at his job will one day deliver him the party leadership. Nor should he assume the broader Right will unite behind him. The NSW Right are no fans of the Treasurer.
But that should be an argument for greater courage, not showing less of it. Excessive caution could leave him with neither a reform legacy nor the prime ministership.
If the pathway to the top is uncertain anyway, why spend his Treasury years behaving as though every difficult decision might jeopardise a guaranteed succession when there isn’t one?
Jim could (and should) chance his arm. Make the economic arguments the nation needs made. Build support beyond his small Queensland Right faction. Force the government to confront the difference between policies that flatter Labor’s identity and those that improve Australians’ prospects.
Chalmers has the intelligence, the education and the life story for politics. What remains in doubt is whether he has the capacity to grow beyond his political apprenticeship.
He wrote a doctorate about Keating’s leadership. It’s time for Chalmers to demonstrate that he learned something from it.